Abstract
In CVP analysis, there is a stylized knowledge of the analytical model which disaggregates operating costs into fixed costs and variable costs with respect to the volume of business operations. However, when the regression analysis is applied to this disaggregation of costs, it often gives remarkably underestimated fixed costs such as negative values. To explore what causes this underestimation, we conduct an empirical study, using cost data provided from a food factory. Then we specify that discretionary costs can relate to the underestimation of fixed costs.
