Stafford Ltd has recently expanded its production facility to satisfy a new customer order that will start in six months. As a consequence, they will have the opportunity to make use of the spare capacity for the next six months. Financial information on the current products sold by Stafford Ltd is as follows.

Required:
a. For the next 6 months, the new production facility has no constraints from either a labour or machine hour perspective. Which product or mix of products should Stafford Ltd produce using this capacity?
b. Assess whether your answer to (a) would be different if there was a constraint in relation to the labour hours available.

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Budget Standard Superior S60 12 15 12 S40 Selling price Direct material Direct labour (S10 per hour) Variable overhead (allocated based on labour hours) Fixed overhead (allocated based on machine hours) S45 12 10 10 4