The-definition.com

Definition

Overhead volume variance

The overhead volume variance refers to the difference between normal capacity hours and standard hours allowed times the fixed overhead rate. The overhead volume variance relates to whether fixed costs were under-or over-applied during the year.

The overhead volume variance is the responsibility of the production department if the cause is inefficient use of direct labor or machine breakdowns. When the cause is a lack of sales orders, the responsibility rests outside the production department.

Share it:  Cite

More from this Section

  • Audit
    Audit is the examination of the books and accounts of a company to examine the books and ...
  • Human element
    The human element is an important factor in every system of internal control. A good system ...
  • Account
    An account is an accounting record of increases and decreases in a specific asset, liability, ...
  • Closing entries
    Closing entries referred as entries that made at the end of an accounting period to transfer ...
  • Treasury stock
    Treasury stock is a corporation’s own stock that has been issued and subsequently reacquired ...