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: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) Transportation to and from airport Cancun 6 6763& 4 1 Jamaica 1 4542NH 1 $130 (Cancun), $520 (Jamaica) $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. Cost Data $60/night 1 $15/ea $20/ea $30/ea $80/ea $55/ea Required: 1. What are the current profit margins on both trips? 2. Take-a-Break's 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.

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: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) Transportation to and from airport Cancun 6 6763& 4 1 Jamaica 1 4542NH 1 $130 (Cancun), $520 (Jamaica) $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. Cost Data $60/night 1 $15/ea $20/ea $30/ea $80/ea $55/ea Required: 1. What are the current profit margins on both trips? 2. Take-a-Break's 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.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 16E

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