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.
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