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 $155 per unit. Its standard cost per unit produced is $125 and its selling and administrative expenses totaled $245,000. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year: Materials price variance $6,800 F
Materials quantity variance $10,500 U
Labor rate variance $3,800 U
Labor efficiency variance $4,700 F
Fixed overhead budget variance $2,800 F
Fixed overhead volume variance $12,300 F

Required:
a. When Forsyth closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?
b. Prepare an income statement for the year.