Exercise 12-16 Identification of Relevant Costs [L012-1] Bill has just returned
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Question
Exercise 12-16 Identification of Relevant Costs [L012-1] 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 50 points Camper and equipment: Cost, $20,000; usable for eight seasons; 10 hunting trips per season $ 200 Travel expense (pickup truck): 100 miles at $0.40 per mile (gas, oil, and tires-$0.22 per mile; depreciation and insurance $0.18 per mile) 40 25 Shotgun ahells (two boxes per hunting trip) Boat: eBook 26 Cost, $2,080, usable for eight seasons; 10 hunting trips per season Cost, $50 for the season; 10 hunting trips per season Loss, $38 (Bill plays poker every weekend whether he goes hunting or stays Hunting license: Money lost playing poker: Print 38 at home) Bottle of whiskey: Cost, $25 per hunting trip (used to ward off the cold) Total cost 25 359 $ 45 References cost per duck ($359 ÷ 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 10 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 two ducks? Complete this question by entering your answers in the tabs below Required 1Required 2 Suppose Bill gets lucky on his next hunting trip and shoots 10 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 two ducks? of last two ducksExplanation / Answer
Travel expense
1)Travel expense
$ 40.00 Shotgun shells $ 25.00 One bottle of whiskey $ 25.00 Total $ 90.00 2) Cost of last two ducks Nill There will be no difference in the cost if shoots 10 ducks. But there will a difference in cost pre duck. That is Relevent cost for 8 ducks = $90/8 = $11.25 That is Relevent cost for 10 ducks = $90/10 = $9.00 Decrease in cost is $2.25 (11.25-9.00)Related Questions
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