Question

Bill has just returned from a duck hunting trip. He brought home eight ducks. Bill’s friend, John, disapproves of duck hunting, and to discourage Bill from further hunting, John presented him with the following cost estimate per duck: Camper and equipment: Cost, $17,000; usable for eight seasons; 14 hunting trips per season $ 152 Travel expense (pickup truck): 100 miles at $0.38 per mile (gas, oil, and tires—$0.28 per mile; depreciation and insurance—$0.10 per mile) 38 Shotgun shells (two boxes per hunting trip) 30 Boat: Cost, $2,480, usable for eight seasons; 14 hunting trips per season 22 Hunting license: Cost, $30 for the season; 14 hunting trips per season 2 Money lost playing poker: Loss, $28 (Bill plays poker every weekend whether he goes hunting or stays at home) 28 Bottle of whiskey: Cost, $20 per hunting trip (used to ward off the cold) 20 Total cost $ 292 Cost per duck ($292 ÷ 8 ducks) $ 36 Required: 1. Assuming the duck hunting trip Bill has just completed is typical, what costs are relevant to a decision as to whether Bill should go duck hunting again this season? 2. Suppose Bill gets lucky on his next hunting trip and shoots 14 ducks using the same amount of shotgun shells he used on his previous hunting trip to bag 8 ducks. How much would it have cost him to shoot the last six ducks

Answer 1

Answer:

Please see attachment

Explanation:

Please see attachment

Answer 2

1. The relevant cost to Bill's decision to go duck hunting again this season is $88.

2. It would cost Bill any additional amount to shoot the last six ducks since he used the same amount of shotgun shells as previously.

What is the relevant cost?

The relevant cost is the cost that could be avoided if a decision is taken.

This implies that the cost is only incurred when making specific business decisions.

Relevant costs are futuristic costs, unlike irrelevant costs, which are sunk costs.  Relevant costs impact a decision, unlike sunk costs.

Data and Calculations:

                                                 Total        8 Seasons     Unit Cost 14 Trips

Camper and equipment: Cost, $17,000     $2,12                $ 152

Travel expense (pickup truck): 100 miles at $0.38 per mile  38

Shotgun shells (two boxes per hunting trip)                           30

Boat: Cost, $2,480,                                                                  22

Hunting license: Cost, $30 for the season; 14 hunting trips   2

Money lost playing poker: Loss, of $28 (Bill plays poker every weekend whether he goes hunting or stays at home)                         28

Bottle of whiskey: Cost, $20 per hunting trip                       20

Total cost                                                                           $ 292

Cost per duck ($292 ÷ 8 ducks)       $36

Relevant Costs Per Hunting Trip:

Travel expense (pickup truck): 100 miles at $0.38 per mile = $38

Shotgun shells  per trip= $30

Bottle of whiskey per hunting trip = $20

Total unit relevant costs = $88

Thus, the relevant cost to Bill's decision to go duck hunting again this season is $88.

Learn more about relevant costs at https://brainly.com/question/14184614