Stellantis has been conducting earlystage research on hydrogenpowered automobiles and is nearing the point where product development will begin. In order to determine the feasibility of the product, assume Chrysler has conducted market research. Research indicates the price target for the product must be no more than $ if it is to appeal to a large enough market segment to sell automobiles in the first year of production. The CFO has indicated that the new product must meet a minimum profit margin requirement.

REQUIRED

a Calculate the target cost per unit to produce the hydrogenpowered automobile.

$Answer

b If the company cannot achieve the profit margin requirement, but can come close, should Stellantis continue to produce the car given the environmental benefits?

Stellantis should Answer

c One of the researchers realizes that the margin will be less than the minimum profit margin requirement. However, the researcher believes that the automobile would be beneficial to society. Given the inherent error implicit in cost measurement, should the researcher intentionally underestimate the cost of the automobile in order to ensure that the automobile is produced?