Take-a-Break Travel Company offers spring break travel packages to college stude

Question

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: The Cancun trip sells for $750, and the Jamaica trip sells for $690. What are the current profit margins for both trips? 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 prices levels. Describe two ways that Take-a-Break Travel could cut its costs to get the profit margin back to their original levels.

Explanation / Answer

c.

Either reduce the number of nights stay in the room or reduce the scuba driving trips or water skiing trips.

a.Compute the current price margin Particulars Cancum Jamaica Cost data Trip cost to cancum Trip cost to Jamaica Ocean front room 6 4 30 180 120 Meals: Breakfasts 7 5 5 35 25 Lunch 7 5 7 49 35 Dinner 6 0 10 60 0 Scuba driving trips 4 2 15 60 30 Water skiing trips 5 2 10 50 20 Airfare (round trip) 1 1 200 355 Airport round trip transportation 1 1 15 10 Total Cost for the trip 649 595 Ticket fare 750 690 Profit margin per ticket 101 95 b.Compute the current price margin Particulars Cancum Jamaica Cost data Trip cost to cancum Trip cost to Jamaica Ocean front room 6 4 30 180 120 Meals: Breakfasts 7 5 5 35 25 Lunch 7 5 7 49 35 Dinner 6 0 10 60 0 Scuba driving trips 4 2 15 60 30 Water skiing trips 5 2 10 50 20 Airfare (round trip) 1 1 200 355 Airport round trip transportation 1 1 15 10 Total Cost for the trip 649 595 Ticket fare 710 650 Profit margin per ticket 61 55

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