Question

Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a 6-day, 5-night trip to Cancun and a 6-day, 5-night trip to Jamaica, have the following characteristics: Cancun Jamaica Cost Data $ 25/night оп Package Specifications Oceanfront room; number of nights Meals: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) в Рове и $ 5/ea $ 4/ea $ 10/ea $ 19/ea $ 14/ea $ 195 (Cancun), $ 270 (Jamaica) $ 19 (Cancun), $ 14(Jamaica) Transportation to and from airport The Cancun trip sells for $750, and the Jamaica trip sells for $690, 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 on the Cancun and Jamaica trips to $710 and $640, respectively, 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.) Cancun Jamaica Profit margin Profit margin (%)

Answer 1

1.

	Cancun	Jamaica
Sales $	750	690
Less Costs:
Oceanfront room	125	125
Meals: Breakfasts	25	25
Meals: Lunches	12	20
Meals: Dinners	40	0
Scuba diving trips	76	76
Water skiing trips	126	84
Airfare	195	270
Transportation to and from airport	19	14
Total cost $	618	614
Profit $	132	76
Profit margin %	17.6%	11.0%

2.

	Cancun	Jamaica
Sales $	710	640
Less Costs:	618	614
Profit $	92	26
Profit margin %	13.0%	4.1%