Chapter 10.B, Problem 1E

EXERCISE 10B-1 Standard Cost Flows; Income Statement Preparation LO10-5
Forsyth Company manufactures one product it does not maintain any beginning or ending inventories, and its uses a standard cost system. During die year, the company produced and sold 10,000 units at a price of $135 per unit. Its standard cost per unit produced is S105 and its selling and administrative expenses totaled $235,000. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year:

Required:

1. When Forsyth closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?
2. Using Exhibit 10B-5 as a guide, prepare an income statement for the year.