Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $16.00 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 $14.40. The annual fixed cost for GGN is $15,480. Required: a. How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. b. The owner of GGN believes that the company can sell 12,900 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 $16.00 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 $14.40. The annual fixed cost for GGN is $15,480. Required: a. How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. b. The owner of GGN believes that the company can sell 12,900 chains a year. What is the margin of safety in terms of the number of chains?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sanj
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Transcribed Image Text:Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $16.00 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 $14.40. The
annual fixed cost for GGN is $15,480.
Required:
a. How many cases must Golden Gate Novelties sell every year to break even?
Note: Do not round intermediate calculations.
b. The owner of GGN believes that the company can sell 12,900 chains a year. What is the margin of safety in terms of the number of
chains?
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