General Mills makes Nature Valley granola bars, Cheerios cereal, Yoplait yogurt, Hagen-Dazs ice cream, and many other food products. Suppose the product manager of a new General Mills cereal has determined that the appropriate wholesale price for a carton of the cereal is $48. Fixed costs of the production and marketing of the cereal are $19 million.

1. The product manager estimates that she can sell 800,000 cartons at the $48 price. What is the largest variable cost per carton that General Mills can pay and still achieve a profit of $1 million?

2. Suppose the variable cost is $25 per carton. What profit (or loss) would General Mills expect?

IMPORTANT NOTE:

Please show work for all problems!