What is overhead allocation based on volume alone?

Overhead allocation based on volume alone is a method of distributing indirect costs, such as administrative expenses and utilities, to products or services based solely on their production volume or quantity. This approach assumes that all products consume overhead resources in proportion to the number of units produced, often using a single allocation base like direct labor hours or machine hours. While this method is straightforward, it can lead to inaccuracies if products require varying amounts of overhead resources, potentially distorting cost information and decision-making.