Keep in mind that the more units you can build with the same fixed costs the lower the per unit fixed cost is and the lower your total cost per unit will be. Fixed cost per unit plus variable cost per unit equals total cost per unit. When you hear the term "economies of scale" fixed costs is the main concept it is referring to. Variable costs will never go away regardless of how many units you build, but once you have all of your fixed costs covered by the contribution margin, then you can begin producing an income. Fixed costs per unit changes depending on the number of units you produce, but variable costs per unit doesn't change. Be certain to review fixed cost in total and fixed cost per unit, as well as total variable costs and variable costs per unit. 1. What does the area to the left of the break-even point represent and to the right? 2. If this company did not have any revenue and didn't produce any units, thus no variable costs, what is the maximum it would lose