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This case illustrates a strategy-driven costing system combining ideas from lean management and the Theory of Constraints (TOC) to align performance measures and continuous improvement (CI) decisions with strategy. The primary theme is that a costing system can be integrated with and used to promote an organization's strategies to maintain competitive advantage. This case demonstrates that cost accounting can be more than a full-cost allocation scheme. It can encourage adaptation in an unstable environment, for example, as Kenco uses accounting data to manage continuous improvement. A distinguishing feature of this case is the use of strategic cost drivers as more representative of cause and effect (investments in fixed costs) than operational activities that may only indirectly influence capacity costs. Where time is a problem, or students lack sufficient exposure, the instructor has presented some of the earlier questions as a lecture. Where preparation has been sufficient, the order of the questions is suggestive.