Joe loves to duck hunt. Joe makes 10 duck hunting trips per year. Joe always shoots 10 ducks per trip and is able to sell the ducks shot to a local restaurant for $8 per duck—thus pocketing $80/trip. Joe read a Beginning Managerial Accounting Book last night and estimates his per/trip costs of each duck hunting trip as follows:
Description Per/Unit Costs
Camper:
Purchased on 1/1/2018 for cash. Purchase price is 12,000
Usable for 8 years. ($12,000/8yrs/10 trips per year) $150
Travel Expense (Pick-up truck-bought on 1/1/2018):
Milage 21 cents/mile for 100 miles per trip $21
Pick-up Truck Depreciation (10 cents per mile—100 miles per trip) $10
Shotgun shells (two boxes–$10 per box) $20
Boat*:
Purchased on 1/1/2018 for $2,320 cash. Usable for 8 years.
(2,320/8yrs/10trips) $29
Hunting License
Cost: 30 per season—not yet purchased $30
Money Lost Playing Poker:
Joe plays poker every weekend by the campfire he goes duck
hunting. He regularly Loses $39 per game. If he stays
home and plays in the poker game at the neighborhood
Pub he only loses $23 per game $39
Total Estimated Costs per trip $272/trip
Or $2,720 annuallyPart A: Joe is concerned about the costs of duck hunting and is considering quitting duck hunting in 2018. Which per/trip costs are relevant and not-relevant to his decision? Answer this question by filling in the per-trip cost for each line item in the appropriate “relevant” or ‘not-relevant” column.
Descriptioin Per/Trip Costs
EST Relevant Not Relevant
Camper*:
Purchased on 1/1/2018 for cash. Purchase price is 12,000
Usable for 8 years. ($12,000/8yrs/10 trips per year) $150
Travel Expense (Pick-up truck)*:
Milage 21 cents/mile for 100 miles per trip $21
Pick-up Truck Depreciation (10cts/mile-100 miles per trip) $10
Shotgun shells (two boxes–$10 per box) $20
Boat*:
Purchased on 1/1/2018 for $2,320 cash. Usable for 8 years.
(2,320/8yrs/10trips) $29
Hunting License
Cost: 30 per season, not yet purchased $3
Money Lost Playing Poker:
Joe plays poker every weekend by the campfire he goes duck
hunting. He regularly Loses $39 per game. If he stays
home and plays in the poker game at the neighborhood
Pub he only loses $23 per game $39 Part B: Based on your answer in Part A, what are Joe’s Annual Cost Savings (in total) by discontinuing duck-hunting (Show all work). Part C: Should Joe continue or discontinue duck hunting? Please provide support for your response.