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GAAP requires absorption costing, but absorption costing creates an incentive to overproduce. Variable costing decreases the incentive to overproduce, but variable costing is not GAAP.

GAAP requires absorption costing, but absorption costing creates an incentive to overproduce. Variable costing decreases the incentive to overproduce, but variable costing is not GAAP. Why do you think variable costing is not compliant to GAAP?

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