. The cost per batch of Q and Y enzymes is $200,000, resulting in 300
grams of Q and 200 grams of Y. before Q and Y can be sold, they must be
processed further at costs of $100 and $150 per gram, respectfully. Each batch
requires one month of processing time and only one batch per month is produced.
The monthly demand for Q and Y depends on the price charged.
The following table summarizes the various price quantity combinations.
Quantity Sold Price per Gram of Q Price per gram of Y
50
$1,200
$750
100 1,100 550
150
1,000 350
200 900 150
250
800 n.a
300 700 n.a
In the following analysis, the optimum price of Q is $900 per gram and
the optimum price of Y is $750 per gram.
Quantity Price Revenue Total Total Price Revenue Total Total
Sold per Q of Q cost of Q* profit per Y from Y cost of Y^ profit
| 50 | $1,200 | $60,000 | $25,000 | $35,000 | $750 | $37,500 | $27,000 | $10,000 |
| 100 | 1,100 | 110,000 | 50,000 | 60,000 | 550 | 55,000 | 55,000 | 0 |
| 150 | 1,000 | 150,000 | 75,000 | 75,000 | 350 | 52,500 | 82,500 | (30,000) |
| 200 | 900 | 180,000 | 100,000 | 80,000 | 150 | 30,000 | 110,000 | (80,000) |
| 250 | 800 | 200,00 | 125,000 | 75,000 | n.a | |||
| 300 | 700 | 210,000 | 150,000 | 60,000 | n.a. |
*cost per gram of Q + ($200,000/500)+$100+$500/gram.
^cost per gram of Y= ($200,000/500)+$150+$550/gram.
A. Critically evaluate the analysis underlying the pricing decisions of
$900 for Q and $750 for Y.