Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a 7-day, 6-night trip to Cancun and a 5-day, 4-night trip to Jamaica, have the following characteristics: Package Specifications Oceanfront room; number of nights Cost Data Cancun Jamaica 6 4 $73/night Meals: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) 6963TL 4 $10/ea 7 5 $15/ea 4 $25/ea 2 $93/ea 4 2 $68/ea 1 1 $400 (Cancun), $500 (Jamaica) Transportation to and from airport 1 1 $60 (Cancun), $66 (Jamaica) The Cancun trip sells for $2,100, and the Jamaica trip sells for $1,860, and both packages allow two bags to be checked for free. Required: 1. What are the current profit margins on both trips? 2. Take-a-Break's management believes that it must drop the price of each trip by $118 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels.
Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a 7-day, 6-night trip to Cancun and a 5-day, 4-night trip to Jamaica, have the following characteristics: Package Specifications Oceanfront room; number of nights Cost Data Cancun Jamaica 6 4 $73/night Meals: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) 6963TL 4 $10/ea 7 5 $15/ea 4 $25/ea 2 $93/ea 4 2 $68/ea 1 1 $400 (Cancun), $500 (Jamaica) Transportation to and from airport 1 1 $60 (Cancun), $66 (Jamaica) The Cancun trip sells for $2,100, and the Jamaica trip sells for $1,860, and both packages allow two bags to be checked for free. Required: 1. What are the current profit margins on both trips? 2. Take-a-Break's management believes that it must drop the price of each trip by $118 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Rahul
Transcribed Image Text:Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages,
a 7-day, 6-night trip to Cancun and a 5-day, 4-night trip to Jamaica, have the following characteristics:
Package Specifications
Oceanfront room; number of nights
Cancun
Jamaica
6
4
Cost Data
Meals:
Breakfasts
Lunches
Dinners
Scuba diving trips
Water skiing trips
Airfare (round trip from Miami)
Transportation to and from airport
7
69634L
454221
1
1
1
$73/night
$10/ea
$15/ea
$25/ea
$93/ea
$68/ea
$400 (Cancun),
$500 (Jamaica)
$60 (Cancun),
$66 (Jamaica)
The Cancun trip sells for $2,100, and the Jamaica trip sells for $1,860, and both packages allow two bags to
be checked for free.
Required:
1. What are the current profit margins on both trips?
2. Take-a-Break's management believes that it must drop the price of each trip by $118 in order to remain
competitive in the market. Recalculate profit margins for both packages at these price levels.
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