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 @ $12.00/hour
Variable overhead:	$3,302,000
Fixed overhead:	$998,000

Round all overhead rates to two decimal places. Calculate the variable overhead efficiency variance.

a.$80,000 U

b.$36,850 U

c.$36,850 F

d.$4,000 U

e.None of these choices are correct.