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 $136 per unit. Its standard cost per unit produced is $106 and its selling and administrative expenses totaled $235,500. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year:

Materials price variance	$ 6,600	F
Materials quantity variance	$ 10,300	U
Labor rate variance	$ 3,600	U
Labor efficiency variance	$ 4,500	F
Fixed overhead budget variance	$ 2,600	F
Fixed overhead volume variance	$ 12,100	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.