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 $137 per unit. Its standard cost per unit produced is $107 and its selling and administrative expenses totaled $236,000. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year: Materials price variance $ 6,700 F Materials quantity variance $ 10,400 U Labor rate variance $ 3,700 U Labor efficiency variance $ 4,600 F Fixed overhead budget variance $ 2,700 F Fixed overhead volume variance $ 12,200 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.