Relevant Cost: Relevant costs are all those costs that are related to a specific decision and can affect the decision. It is also known as avoidable cost as it is incurred only when a particular decision is taken. To determine: Relevant cost of hunting trip Solution: Following are the relevant costs of the trip: Calculation of relevant costs Travel expenses (100 miles at $0.21 per mile) $21 Shotgun shells $20 One bottle of whisky $15 Total relevant costs $56 This problem assumed that bill will not consume whiskey if he will not go to the hunting trip. The money lost in poker is irrelevant, as bill would have played poker anyways. Conclusion: Amount of $66 can be saved, if bill will not take hunting trip. 2) To determine: Cost of third duck. Solution: The cost for shooting extra two ducks would be similar to the cost of shooting eight ducks. Apart from costing two extra shotgun shells, bill does not need to incur any additional cost to shoot extra two ducks. All the costs will remain same, irrelevant to the number of ducks hunted by the bill. Therefore, no extra cost to be bear by bill in order to hunt two additional ducks. Conclusion: There is no effect on the costs of hunting due to the shooting of less or more number of ducks. 3) Relevant costs: Relevant costs are all those costs that are related to a specific decision and can affect the decision. It is also known as avoidable cost as it is incurred only when a particular decision is taken. To determine: Relevant costs to give up hunting. Solution: Almost all the cost mentioned above are relevant costs to give up hunting entirely. If bill, will not going to hunt then he does not need to pay for travel expenses, shotgun balls and probably for whisky bottle consumed on hunting trip. Apart from that he does not need to incur the cost of procuring hunting license again after its expiration or any renew costs associated with it. Also, he can sell off boat and pick up trip, the resale value of these items will be considered in relevant costs. Conclusion: Almost all costs are relevant to decide whether bill should give up hunting or not. By giving up hunting he can save lots of money.

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