Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $13.00 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 $11.40. The annual fixed cost for GGN is $15,120. Required: How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. The owner of GGN believes that the company can sell 12,600 chains a year. What is the margin of safety in terms of the number of chains?

Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $13.00 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 $11.40. The annual fixed cost for GGN is $15,120. Required: How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. The owner of GGN believes that the company can sell 12,600 chains a year. What is the margin of safety in terms of the number of chains?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter4: Preparing And Using Financial Statements

Section: Chapter Questions

Problem 17DQ

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Required:

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

Note: Do not round intermediate calculations.
The owner of GGN believes that the company can sell 12,600 chains a year. What is the margin of safety in terms of the number of chains?

a. Break-even point
b. Margin of safety
chains
chains

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