Answered: Camper and equipment: Cost, $12,000;…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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:

1. Assuming that 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 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 if costs are estimated per duck? Explain.
3. Which costs are relevant in a decision of whether Bill should give up hunting? Explain.

Camper and equipment:
Cost, $12,000; usable for eight seasons; 10 hunting trips per season..
Travel expense (pickup truck):
100 miles at $0.31 per mile (gas, oil, and tires-$0.21 per mile; depreciation
and insurance-$0.10 per mile..
Shotgun shells (two boxes). .
$150
31
20
Boat:
Cost, $2,320, usable for eight seasons; 10 hunting trips per season..
Hunting license:
Cost, $30 for the season; 10 hunting trips per season...
Money lost playing poker:
Loss, $24 (Bill plays poker every weekend).
Bottle of whiskey:
Cost, $15 (used to ward off the cold) ..
29
3
24
15
Total cost ...
$272
Čost per duck ($272 + 8 ducks)
$ 34

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