Depreciation on fishing boat

Assignment Help Accounting Basics

Reference no: EM131125023

Steve has just returned from salmon fishing. He was lucky on this trip and brought home 2 salmon. Steveâ€^TMs wife, Wendy, disapproves of fishing, and to discourage Steve from further fishing trips, she has presented him with the following cost data. The cost per fishing trip is based on an average of 10 fishing trips per year.

Cost per fishing trip:

Depreciation on fishing boat* (annual depreciation of $1,300 Ã· 10 trips) $ 130

Boat storage fees (annual rental of $1,600 Ã· 10 trips) 160

Expenditures on fishing gear, except for snagged lures

(annual expenditures of $260 Ã· 10 trips) 26

Snagged fishing lures 9

Fishing license (yearly license of $60 Ã· 10 trips) 6

Fuel and upkeep on boat per trip 28

Junk food consumed during trip 9

Total cost per fishing trip $ 368

Cost per salmon ($368 Ã· 2 salmon) $ 184.00

*The original cost of the boat was $13,000. It has an estimated useful life of 10 years, after which it will have no resale value. The boat does not wear out through use, but it does become less desirable for resale as it becomes older.

Required:

1.Assuming that the salmon fishing trip Steve has just completed is typical, what costs are relevant to a decision as to whether he should go on another trip this year? (Omit the $ sign in your response.)

Total relevant cost $

2.Suppose that on Steveâ€^TMs next fishing trip he gets lucky and catches three salmon in the amount of time it took him to catch two salmon on his last trip. How much would the third salmon have cost him to catch?

Reference no: EM131125023

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