Forsyth Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. During the year, the company produced and sold 10,000 units at a price of $139 per unit. Its standard cost per unit produced is $109 and its selling and administrative expenses totaled $237,000. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year: Materials price variance $ 6,900 F Materials quantity variance $ 10,600 U Labor rate variance $ 3,900 U Labor efficiency variance $ 4,800 F Fixed overhead budget variance $ 2,900 F Fixed overhead volume variance $ 12,400 F
Required:
1. When Forsyth closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?
2. Prepare an income statement for the year.