Question

Please explains and show calculations.
Thank you.

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 $ 125 Cost, $14,00e; usable for eight seasons; 14 hunting trips per season Travel expense (pickup truck): 100 miles at se.40 per mile (gas, oil, and tires-$e.20 per mile; depreciation and 40 insurance-$e.20 per mile) 40 21 4 Shotgun shells (two boxes per hunting trip) Boat: Cost, $2,400, usable for eight seasons; 14 hunting trips per season Cost, $50 for the season; 14 hunting trips per season Loss, $32 (Bill plays poker every weekend whether he goes hunting or stays at Hunting license: Money lost playing poker: 32 home) Bottle of whiskey: Cost, $20 per hunting trip (used to ward off the cold) Total cost 20 282 $ 35 cost per duck ($282 ÷ 8 ducks) 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 ducksi?

Answer 1

The relevant costs are

travel expense=40

shotgun shells=40

Bottle of whiskey=20

Total relevant cost=40+40+20=100

Rest of all the cost is sunk cost as they are already incurred irrespective of whether the bill goes for hunting or not.

Cost per duck=100/8=12.5

b)All cost the same as his previous trip cost if he shoots extra two ducts. The only possible cost is extra shotgun shells. All costs are already incurred, so there is no matter how many ducks shoots.