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A fictional example demonstrates the danger of using fully allocated costs, even ABC, to determine the profitability of a newly proposed product line. Using marginal costing improves the solution but does not fully consider the option of increasing capacity. In order to determine whether capacity should be increased additional analysis must be done that focuses on the best way to use constraints and simultaneously balance demand against risk. The main focus of the case is the behavior of step-fixed costs. Capacity usually must be purchased in lumps that are rarely divisible. Students seldom have the opportunity in cases to deal with step-fixed costs and changing capacity. This case allows them to do both.