The Financial accounting Standards Board (FASE) has created a single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP) called the FASB accounting Standards Codification (FASB codification ). Although the FASB codification does not explicitly disallow variable costing. It does explicitly prohibit companies from excluding all manufacturing overhead costs form product costs. It also provides an in-depth discussion of fixed overhead allocation to products, thereby imply that absorption costing is required for external reports. Although some companies expense significant elements of fixed manufacturing costs on their external reports. Practically speaking. U.S. GAAP requires absorption costing for external reports.