This study examines how manufacturing firm’s cost structure influences earnings managementthrough real activities. Earnings management through real activities manipulation are definedas sales manipulation, reduction of discretionary expenditures and overproduction. Productioncost derived manufacturing activities and selling, general, and administrative costs(SGA cost)derived selling activities are affected by individual firm’s cost structure. Variable cost ofproduction cost and SGA cost is incurred by cost driver and it is difficult to use variable cost forearnings management. So, this study expected that the higher variable cost proportion inproduction cost and SGA cost, the lower level of earnings management. For measuring variablecost proportion, we used typical methods of cost structure, account classification analysismethod and regression analysis method. And for measuring earnings management through realactivities manipulation, we estimated abnormal CFO, abnormal production cost, abnormaldiscretionary expenditure using Roychowdhury model(Roychowdhury, 2006). The sample consists of 2,224 KSE manufacturing firm-years with December fiscal year in1995-2011. The result of this study showed that firms with high variable cost proportion inproduction cost and SGA cost have low level of abnormal production cost and abnormaldiscretionary expenditure. This means that cost structure of production cost derived manufacturingactivities and SGA cost derived selling activities affected on opportunistic earnings management. However, this study have a limitation that for measuring variable cost proportion, we did notconsider various cost driver.