The Internal Revenue Service allows the use of both variable and absorption costing.

Name: The Internal Revenue Service allows the use of both variable and absorption costing.
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The Internal Revenue Service (IRS) requires companies to use absorption costing (also known as full costing) for external reporting purposes, including tax filings, because it includes all manufacturing costs in the cost of a product, not just the variable costs as in variable costing.

The Internal Revenue Service Allows the Use of Both Variable