Measuring voltage from home to outbuilding
For a 120v circuit to have that loss, Your load is in the 12 amp range this will produce 3.47% voltage drop or 4.167v so you can look at the cost of running a small conductor.
the wire is consuming some of the power.
I am not sure how you came up with your numbers
If your actual voltage drop is 3.5% 120v 100’ 12awg copper this would provide 12 amps, based on 1.9029 resistance per 1k feet 0.054 ohms reactance per 1k feet with a actual Voltage drop of 4.167v as stated above. Southwire.com used.
P= I x E  12a x 120v =1440w  but power is charged in watt hours so your .850 kw or 850w means nothing and is not matching up with a 3.5% voltage drop on a 120v line.
If you would like further assistance figuring out what is really happening we can help there but with the info provided things don’t correlate.