Institute Technologies is choosing new cost drivers for its accounting system. One driver is labor hours; the other is a combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs. Data for the past year follow.

	Budget		Actual
Labor hours		215,000				215,000
Machine hours		375,000				465,000
Number of setups		3,300				3,600
Unit variable cost pool	$	1,687,500			$	2,092,500
Batch-level cost pool	$	924,000			$	1,008,000

Assume that both cost pools for Institute are combined into a single pool, and labor hours is the driver. The total flexible budget for the actual level of labor hours and the total variance for the combined pool are:

	Flexible Budget		Variance
A.	$	1,687,500			$	405,000	U
B.	$	2,611,500			$	489,000	U
C.	$	2,695,500			$	405,000	U
D.	$	3,016,500			$	84,000	U
E.	$	3,100,500			$	0