Solution :
1.                                <u>Calculation of total revenue</u>
Total revenue = cost of goods sold + Markup 7% = Revenue
University       = 38000 + 2660 = 40660
Memorial        = 38000 + 2660 = 40660
Therefore, markup = cost of goods sold x market up
                               = 38000 x 7%
                               = 2660 
2.                                <u>Calculations of Activity rates</u>
Activity rate     = activity cost pool / total activity = activity rate 
Customer deliveries  = 420000 / 5000 = 84
Manual order processing = 624000 / 8000 = 78
Ele order processing = 170000 / 10000 = 17
Line time picking = 675000 / 450000 = 1.5
3.                               <u> Calculations of Activity costs</u>
<u>Activity cost for University</u>
Activity cost pool =  Activity  x  Activity rate 
Customer deliveries  = 16 x 84 = 1344
Manual order processing = 0 x 78 = 0
Ele order processing = 18 x 17 = 306
Line time picking = 190 x 1.5 = 285
Total activity cost = 1935
 
<u>Activity cost for Memorial</u>
Activity cost pool =  Activity  x  Activity rate 
Customer deliveries  = 28 x 84 = 2352
Manual order processing = 49 x 78 = 3822
Ele order processing = 0 x 17 = 0
Line time picking = 210 x 1.5 = 315
Total activity cost = 6489
4.      <u>Calculation of Customer margin</u>
                                                  University        Memorial
Sales revenue                           40660              40660
Less : Cost of goods sold        38000               38000
Gross Margin                            2660                   2660
Less : Activity cost                    1935                    6489
Customer Margin                      725                    -3829