4 Bill has just returned from a duck hunting trip. He brought home eight ducks.

Question

4 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: 03:26:00 Cost, $18,000; usable for eight seasons; 10 hunting trips per season Travel expense (pickup truck): $ 180 100 miles at $0.45 per mile (gas, oil, and tires-$0.30 per mile; depreciation and insurance-$0.15 per mile) 45 30 Shotgun shells (two boxes per hunting trip) Boat: eBook Cost, $2,160, usable for eight seasons; 10 hunting trips per season Cost, $40 for the season; 10 hunting trips per season Loss, $32 (Bill plays poker every weekend whether he goes hunting or stays 27 Hunting license: Money lost playing poker: 32 at home) Bottle of whiskey: Cost, $20 per hunting trip (used to ward off the cold) Total cost 20 338 $ 42 Cost per duck ($338 ÷ 8 ducks) Requirec 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 1 Required 2 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? Total

Explanation / Answer

Solution:

1.

Travel expense $32

Shotgun shells 30

One bottle of whiskey 20

Total $82

This answer assumes that Bill would not be drinking the bottle of Old Grandad anyway. It also assumes that the resale values of the camper, pickup truck, and boat are not affected by taking one more hunting trip.

The money lost in the poker game is not relevant because Bill would have played poker even if he did not go hunting. He plays poker every weekend.

The other costs are sunk at the point at which the decision is made to go on another hunting trip.

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