FASB rules require companies to use direct costing methods, and do not allow the use of full absorption costing methods, for financial reporting purposes.

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FASB rules require companies to use both direct costing and full absorption costing methods for financial reporting purposes, and do not prohibit the use of either method. However, they may have different tax and managerial accounting implications.

FASB Rules Require Companies to Use Direct Costing Methods, and Do