Breakeven analysis: A real example. Common on, you can do this, it's easy!

You are considering purchasing a new testing machine that has a fixed cost of \$100,000, generates revenue of \$500 per test, and variable costs associated with testing of \$50.
You want to know: How many tests does your office need to do for you to cover your initial \$100,000 investment. If you had \$0 costs associated with each test, you would divide your initial investment by \$500, the revenue you receive from each test. However, your cost for performing the test is \$50 not 0. So, \$500 minus 0 = \$450 per test.
The equation is simple: Total revenues – total variable costs- fixed costs= profit
So, here it is: (100x volume) – (50 x volume) – 100,000 = Profit
OR since you are calculating breakeven the profit = 0
OR (100 – 50) x volume = 100,000
OR 450 x volume = 100,000
OR volume = 100,000/450 = 223 tests
After performing 223 tests, each test (which generates \$450 or the contribution margin) becomes pure profit because you have already paid off your equipment. (See previous explanation of CM) GOT IT!