Greenchem, Inc., produces chemicals used in the cleaning industry. During the previous month, it incurred $300,000 ofj oint costs in producing 60,000 units of AM-12 and 40,000 units of BM-36.

Greenchem allocates joint costs based on the number of units produced. Currently, AM-12 is sold at split off for $3.50 per unit. Flank Corp. has approached Greenchem to purchase all of the AM-12 monthly production after further processing, which will cost Greenchem $90,000 per month Required

a. What is the minimum sales price Greenchem should charge Flank for AM-12 after further processing?

b. Assume that Greenchem has agreed to sell AM-12 to Flank after further processing for $5.50 per unit. During the first month, Greenchem delivered 50,000 units to Flank and had 10,000 units remaining in inventory at the end of the month. What is the operating profit generated by sales of AM-12 during the first month, and what is the cost of processed AM-12 still in inventory at the end of the month?