Case 15-49 Bidding on a Special Order; Ethics (LO 15-10) 11 1.04 points 03:28:35 Zylar Industries is a manufacturer of standard and custom-designed bottling equipment. Early in December 20x0, Lyan Company asked Zylar to quote a price for a custom-designed bottling machine to be delivered in April. Lyan intends to make a decision on the purchase of such a machine by January 1, so Zylar would have the entire first quarter of 20x1 to build the equipment. Zylar's pricing policy for custom-designed equipment is 50 percent markup on absorption manufacturing cost. Lyan's specifications for the equipment have been reviewed by Zylar's Engineering and Cost Management departments, which made the following estimates for direct material and direct labor. Direct material eBook Direct labor (9,600 hours at $16) References $266,000 153,600 Manufacturing overhead is applied on the basis of direct-labor hours. Zylar normally plans to run its plant at a level of 15,300 direct- labor hours per month and assigns overhead on the basis of 183,600 direct-labor hours per year. The overhead application rate for 20x1 of $12.00 per hour is based on the following budgeted manufacturing overhead costs for 20x1. Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing overhead $1,101,600 1,101,600 $2,203,200