Doctor J. is considering purchasing a new blood analysis machine to test for HIV

Question

Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. If this new blood analysis machine has design and effective capacities of 6,000 and 5,000 blood analyses per year, respectively, and Dr. J. expects to perform 4,500 HIV blood analyses each year, how many blood analyses would Dr.j need to pay for the machine?

Explanation / Answer

Machine Purchase cost = $ 60,000

Fee charged per test = $ 25

Cost per test = $ 5

Blood analyses needed to pay for the machine = Purchase cost / (fee charged per test - cost per test)

= 60000/(25-5)

= 3000 test

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