Barry's Burger Shack operates a single location at NEU selling burgers, fries, and sodas to faculty and students. Revenues for 2017 were $90,000 with profits of $2,250; industry benchmarks suggest profit margins should be close to 10% of revenue. Barry noticed an increasing number of complaints from customers over the quality of his burgers and the messiness of soda service are and has hired you to estimate the cost of quality for his burger business. One in 30 customers returned burgers for a replacement due to burger being too greasy, serving too cool, or served with wrong ingredients, the cost to replace was 1,600 per year.

You observe the cooking process for a few days, and identify the following process steps as well as related material costs, labor time, and scrap % at each step

Required: Complete the chart above to compute the scrap cost per unit. Assuming Barry sells 18,000 burgers per year, what his annual cost of scrap? What would you recommend?

			Material	Labor		Units	Labor $/hr	Cumul.	Scrap
Step	Process Description		$/unit	Mins/unit	% scrap	Started	$9.00	Cost	Cost
1	Remove/thaw burgers		$0.75	0.10	0.0%	18,000			$-
2	If uncooked >24hrs, scrap		$-	0.20	1.0%				$-
3	Cook on grille		$0.10	1.50	0.0%				$-
4	if overcooked, scrap		$-	0.30	1.5%				$-
5	Assemble burger		$0.30	0.90	0.0%				$-
6	Store in heating unit		$-	0.10	0.0%				$-
7	If >10 mins in heater, scrap		$-	0.20	2.5%				$-
	Totals		$1.15	$3.30	5.0%		$0.000	$0.000	$-