Considering the two methods for disposing underapplied or overapplied overhead:

In the case of an overapplied overhead estimation, closing it out to Cost of Goods Sold makes the net operating income higher than if it was closed proportionally to Work in Progress, Finished Goods and Cost of Goods Sold.

Closing the underestimation or the overestimation of manufacturing overhead to Cost of Goods is the most complex method of overhead adjustment.

Closing underapplied overhead proportionally to Work in Process, Finished Goods and Cost of Goods Sold is the least accurate method.

In the case of an underapplied overhead estimation, closing it out to Cost of Goods Sold makes the net operating income higher than if it was closed proportionally to Work in Progress, Finished Goods and Cost of Goods Sold.