full costing In this calculation the total overheads are allocated to each activity in a simple manner. You have to divide up the cost of overheads cost using a simple formula. So, you divide up the total overheads in the given ratio. absorption cost The overheads are first apportioned to particular products, then we can calculate the share of these apportioned overheads per unit. marginal cost This is an approach to make future decisions easier. It includes the variable costs of producing extra units, but it ignores fixed costs as they are unaffected by the level of activity.