Usage Variance

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Usage Variance

The difference between estimated inputs in a production process and actual inputs, multiplied by their cost, over a period of time. For example, suppose a company expects to use 1,000 hours of work at $5 per hour each week. If it needs to pay for 1,200 hours in week one, its usage variance is $1,000 ([1,200 - 1,000] * $5). Likewise, if it only needs to pay for 700 hours in week two, its variance is -$1,500 ([700 - 1,000] * $5). Obviously, negative usage variance reduces costs while positive variance increases them.
References in periodicals archive ?
Production departments are responsible for using resources, so each foreman is responsible for his or her usage variances.
This activity causes unfavorable materials and labor usage variances and potentially labor rate and variable overhead variances within the Assembly Department.
Instead, unfavorable usage variances that result in subsequent departments are considered their responsibility.
But, it's virtually impossible to unravel an unfavorable direct materials usage variance to determine how much of it is really the responsibility of another department's activities.
The computer system tracks and reports the material and labor usage variances.
Cost Management Systems: Including, at least, weekly materials usage variances tied to specific products and operating lines.
If significant usage variances occur, they research the cause and engage appropriate management to explain the potential impact the variances have on resident billing.
The ATM Statistics & Policing solution implements a policing function per VC and provides on-line notification of any network usage variances from the predefined traffic profile parameters upon which per connection SLAs are based.
For example, if material usage variances are high and equipment usage is high, it may appear as if the asset is near failure, in this case however, excessive energy usage could simply be due to poor material or formula quality and the equipment is performing properly.
Our goal is to increase NOI by driving usage variances to zero," Apostolos says.
4 million of unfavorable material cost and usage variances and a $0.