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
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:
The Cancun trip sells for $1,760, and the Jamaica trip sells for $1,520, 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-Breaks management believes that it must drop the price of each trip by $101 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels.
\begin{tabular}{lccc} Package Specifications & Cancun & Jamaica & Cost Data \\ Oceanfront room; number of nights & 6 & 4 & $57/ night \\ Meals: & 6 & 4 & $11/ ea \\ Breakfasts & 7 & 5 & $16/ ea \\ Lunches & 6 & 4 & $26/ ea \\ Dinners & 3 & 2 & $76/ ea \\ Scuba diving trips & 4 & 2 & $51/ ea \\ Water skiing trips & 1 & 1 & $320 (Cancun), \\ Airfare (round trip from Miami) & 1 & 1 & $500 (Jamaica) \\ Transportation to and from airport & & & $44 (Jancun), \\ & & & \end{tabular} \begin{tabular}{|l|l|l|l|} \hline & \multicolumn{2}{|c|}{ Cancun } & \multicolumn{2}{c}{ Jamaica } \\ \hline Profit margin & & & \\ \hline Profit margin (\%) & & % & \\ \hline \end{tabular}Step by Step Solution
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