Question

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: Cost Data Cancun 12 Jamaica 10 $47/night $12/ea $ 14/ea $ 23/ea Breakfasts 13 13 Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) 7 9 9 29/ea $ 23/ea 12 1 $ 350 (Cancun), 425 (Jamaica) 29 (Cancun), 24 (Jamaica) Transportation to and from airport 1 The Cancun trip sells for $5,250, and the Jamaica trip sells for $5,190, 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 $5,210 and $5,150, respectively, in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels

Answer 1

	Cancun	Jamaica
Sales $	5250	5190
Less Costs:
Oceanfront room	564	470
Meals: Breakfasts	156	132
Meals: Lunches	182	154
Meals: Dinners	253	161
Scuba diving trips	319	261
Water skiing trips	276	207
Airfare	350	425
Transportation to and from airport	29	24
Total cost $	2129	1834
Profit $	3121	3356
Profit margin %	59.45%	64.66%
	Cancun	Jamaica
Sales $	5210	5150
Total cost $	2129	1834
Profit $	3081	3316
Profit margin %	59.14%	64.39%