A summary of the budgeted income statement of Williams Irish Gift Shop follows:

The manager believes that an additional outlay of €200,000 for advertising will increase sales substantially.
1. At what sales level will the shop break even after spending €200,000 on advertising?
2. What sales level will result in a net profit of €40,000 after spending the €200,000 on advertising?

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Net revenue Less expenses, including €400,000 of fixed expenses Net loss € 800,000 880,000 €(80,000)