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Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages,...

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Accounting

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 Cost Data
Oceanfront room; number of nights 6 4 $60 /night
Meals:
Breakfasts 6 4 $15 /ea
Lunches 7 5 $20 /ea
Dinners 6 4 $30 /ea
Scuba diving trips 3 2 $80 /ea
Water skiing trips 4 2 $55 /ea
Airfare (round trip from Miami) 1 1 $130 (Cancun),
$520 (Jamaica)
Transportation to and from airport 1 1 $20 (Cancun),
$50 (Jamaica)

The Cancun trip sells for $1,840, and the Jamaica trip sells for $1,600, 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 $105 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels.

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