Kris Company calculates its predetermined rates using practical volume, which is 325,000 units. The standard cost system allows 3 direct labor hours per unit produced. Overhead is applied using direct labor hours. The total budgeted overhead is $4,260,000, of which $994,000 is fixed overhead. The actual results for the year are as follows:

Units produced: 318,000

Direct labor: 965,000 hours @ 12/hour

Variable overhead: 3,302,000

Fixed overhead: 998,000

Calculate the variable overhead efficiency variance.

A. $80,000 U

B. $45,000 U

C. $36,850 F

D. $36,850 U