fixed production overhead volume variance

Definition

The difference between the budgeted fixed production overhead volume and the budgeted amount. Both the budgeted and actual overhead are multiplied by the overhead rate. For example, a company budgeted production overhead volume of 1,000 units and multiplies that by the overhead rate of $20/unit to get a $20,000 budget. If the actual volume of units is 1,200 there will be a favorable fixed production overhead volume variance of $4,000 (1,200 units x $20/unit - $20,000).