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

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, $20,000; usable for eight seasons; 10 hunting trips per season$200 Travel expense (pickup truck): 100 miles at $0.38 per mile (gas, oil, and tires—$0.26 per mile; depreciation and insurance—$0.12 per mile) 38 Shotgun shells (two boxes per hunting trip) 30 Boat: Cost, $2,160, usable for eight seasons; 10 hunting trips per season 27 Hunting license: Cost, $60 for the season; 10 hunting trips per season 6 Money lost playing poker: Loss, $34 (Bill plays poker every weekend whether he goes hunting or stays at home) 34 Bottle of whiskey: Cost, $25 per hunting trip (used to ward off the cold) 25 Total cost$360 Cost per duck ($360 ÷ 8 ducks)$45 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?

Explanation / Answer

1.

Relevant costs of a hunting trip would be:

2.

If Bill gets lucky to bag another two ducks, All of his costs are likely to be about the same as they were on his last trip. Therefore, it really doesn't cost him anything to shoot the last two ducks -except possibly the costs for extra shotgun shells. The costs are really incurred in order to be able to hunt ducks and would be same whether one ,two, three, or a dozen ducks were actually shot.

Since all of the costs that were relevant have now already been paid,they are now sunk costs and irrelevant.It wouldn't matter if he shot one duck or 15. So the last two ducks would cost nothing to shoot.

Travel expense, gas, oil, tyres(100 miles @ $.26 per mile) $26 Shotgun shells $30 One bottle of whiskey $25 Total $81

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.