Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a seven-day, six-night trip to Cancun and a five-day, four-night trip to Jamaica, have the following characteristics:

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 trip to $710 and on the Jamaica trip to $650 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels.

3. Describe two ways that Take-a-Break Travel could cut its costs to get the profit margin back to their originallevels.

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Package Specifications Cancun Jamaica Cost Data Oceanfront room; number of nights Meals: night $30 $5 Breakfasts each each Lunches S7 Dinners 6 $10 each Scuba diving trips Water skiing trips Airfare (round trip from Miami) Transportation to and from airport $15 each 4 $10 5 each S355 Jamaica 1 S200 Cancun S15 Cancun $10 Jamaica Selling price S750 S690 2.