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 $148 per unit. Its standard cost per unit produced is $118 and its selling and administrative expenses totaled $241,500. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year:

Materials price variance	$	7,800	F
Materials quantity variance	$	11,500	U
Labor rate variance	$	4,800	U
Labor efficiency variance	$	5,700	F
Fixed overhead budget variance	$	3,800	F
Fixed overhead volume variance	$	13,300	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.