This chapter focuses on the fact that uncritical application of cost estimation theory can result into an incorrect result. The process involves classifying the cost behavior as variable, semi-variable and fixed. The striking point is that ambiguity has to be given due consideration instead of assuming that costs would behave as they are supposed to. Running significance test and developing a clear understanding of the business model act as a guide to avoid the erroneous judgment. The qualitative elements such as common sense, informed judgment and reasonableness also play a vital part towards the proper application of theory to obtain the desired and flawless result.