E4-2 Time allowed: 20 minutes 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: Camper and equipment: Cost, £12,000; usable for eight seasons; 10 hunting trips per season Travel expense (pickup van): £150 100 miles at £0.12 per mile (petrol, oil, and tires- 20.07 per mile:
depreciation and insurance-£0.05 per mile) 12 20 Shotgun shells (two boxes) Boat: 29 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, £18 (Bill plays poker every weekend) 18 A fifth of Old Grandad: 8 Cost, £8 (used to ward off the cold) £240 Total cost E30 Cost per duck (£240/8 ducks) Required 1 Assuming that the duck hunting trip Bill has just completed is typical, what costs are relevarnt 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? Which costs are relevant in a decision of whether Bill should give up 3 hunting? Explain.
Travel Expense Assignment