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Bill has just returned from a duck hunting trip. He has brought home eight ducks. Bill's friend, John, disapproves of duck hunting, and to discourage Bill from further hunting, John has presented him with the following cost estimate per duck:
(b) Suppose that Bill gets lucky on his next hunting trip and shoots 10 ducks in the amount of time it took him to shoot 8 ducks on his last trip. How much would it have cost him to shoot the last two ducks? Explain.

Respuesta :

The relevant cost of Bill's decision to hunt ducks again this season is $88. It would cost Bill any extra money to shoot the last six ducks because he used the same number of shotgun shells as before.

Relevant costs are costs that can be avoided if the decision is made. This means that costs are incurred only when making certain business decisions. Relevant costs are future costs, unlike irrelevant costs, which are sunk costs. Relative costs affect the 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:

https://brainly.com/question/14184614

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