Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12.00 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 $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? (Do not round intermediate calculations.)

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?