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 Meals: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) Transportation to and from airport Cancun Jamaica 6 4 Cost Data $63/night 6 $11/ea 7 5 $16/ea 6 4 $26/ea 3 2 $82/ea 4 2 $57/ea 1 1 $330 (Cancun), $500 (Jamaica) 1 1 $35 (Cancun), $54 (Jamaica) The Cancun trip sells for $1,880, and the Jamaica trip sells for $1,640, 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 $107 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 Meals: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) Transportation to and from airport Cancun Jamaica 6 4 Cost Data $63/night 6 $11/ea 7 5 $16/ea 6 4 $26/ea 3 2 $82/ea 4 2 $57/ea 1 1 $330 (Cancun), $500 (Jamaica) 1 1 $35 (Cancun), $54 (Jamaica) The Cancun trip sells for $1,880, and the Jamaica trip sells for $1,640, 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 $107 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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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
Cancun Jamaica
Oceanfront room; number of nights
6
4
Cost Data
$63/night
Meals:
Breakfasts
6
4
$11/ea
Lunches
7
5
$16/ea
Dinners
6
4
$26/ea
Scuba diving trips
3
2
$82/ea
Water skiing trips
Airfare (round trip from Miami)
Transportation to and from airport
4
2
$57/ea
1
1
$330 (Cancun),
$500 (Jamaica)
1
1
$35 (Cancun),
$54 (Jamaica)
The Cancun trip sells for $1,880, and the Jamaica trip sells for $1,640, 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 $107 in order to remain competitive in the market.
Recalculate profit margins for both packages at these price levels.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
What are the current profit margins on both trips? (Round percentage answers to 1 decimal place (i.e. .123 = 12.3%).)
Profit margin
Profit margin (%)
Cancun
%
Jamaica
%
Required
Required 2 >
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