Target Costing in a Service Firm 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...

Target Costing in a Service Firm 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:

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 and Jamaica trips to $710 and $650, respectively, 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 margins back to their original levels.