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Can someone please take the time to explain this problem in easy to understand language step by step. Two genetically engineered enzymes are produced simultaneously

Can someone please take the time to explain this problem in easy to understand language step by step.

Two genetically engineered enzymes are produced simultaneously from a series of chemical and biological processes: Q enzyme and Y enzyme. 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, respectively. 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 Sold

Price per Q

Revenue of Q

Total Cost of Q*

Total Profit

Price per Y

Revenue from Y

Total cost of Y

Total Profit

50

$1,200

$ 60,000

$ 25,000

$35,000

$750

$37,500

$ 27,500

$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

200,000

125,000

75,000

n.a.

300

700

210,000

150,000

60,000

n.a.

a.

Critically evaluate the analysis underlying the pricing decisions of $900 for Q and $750 for Y.

b.

What should management do if the cost per batch rises to $225,000?

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