No friggin way you're machining a fully functioning, all steel Luger for $150, even scaled up to hundreds of thousands in production and even with 95% of the process fully automated with all up-front tooling costs paid-for.
I'll admit that final assembly and finishing would likely drive the cost up past $150, however I'd be willing to put some money down that you could have most if not all of those components machined (including material purchasing costs ) for around $150. The vast majority of those components are small and can be mill-turned from round bar stock. That opens you up to using bar-bed automatic CNC machines, and depending on how much you spend on the machine, you can get them with 5, 6, 8 or even more spindles. You load a bunch of bars in, and the machine cranks away, delivering you part-after-part.
The company I worked for made a lot of revolver cylinders for various gun companies. Solid round bar stock went in one end of the machine, and a completed cylinder popped out of the other end every
45 seconds. We sold the completed cylinders to the manufacturers for about $5, meaning our cost was even less. Looking at the manufacturer's websites - those cylinders that cost us $3 to make, that we sold for $5, have a retail price of around $90-100 depending on the brand.
Toyota infamously could build the 1ZZ Corolla engine for $750 or so. In a modern Chrysler minivan, the
seats cost more to manufacture than the
entire powertrain - even including the axle shafts and wheel hubs.
It's disturbingly cheap to manufacture stuff.