Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the commission paid to the airport operator, and so on, is $10.40. The annual fixed cost for GGN is $15,000.

Required

a. How many cases must Golden Gate Novelties sell every year to break even?

b. The owner of GGN believes that the company can sell 12,500 chains a year. What is the margin of safety in terms of the number of chains?