Yes. A manager could increase operating income by increasing the predetermined factory overhead so that overhead would be significantly overapplied for the period. Some of the overapplied overhead would be allocated to work in process and finished goods inventories. As a result, cost of goods sold would be less than if all of the overapplied overhead were transferred to cost of goods sold. However, the costs allocated to work in process and finished goods inventories would affect the income statement of the next period. Specifically, the next period’s cost of goods sold would be higher when the inventories are further processed and sold.
Transferring the over- and underapplied overhead to the cost of goods sold account is easier than allocating it to work in process, finished goods, and cost of goods sold. Since over- and underapplied overhead is normally small, it makes sense for generally accepted accounting principles (GAAP) to simplify the accounting.