Cost Accounting Mystery Cache

Many people have based puzzle caches on their professions. I've wanted to do the same thing, but I never knew exactly how to do it. I am a product manager for a computer accessory company, and my duties are varied and difficult to explain to someone who is unacquainted with the job in the first place. However, there is one set of calculations that I work with almost daily and which comprise the core of my work.

First a little background: Most people think that if you buy something for $6 and turn around and resell it for $10 that you have made $4. That is not quite the case because the true cost of the item you are selling is more than $6, sometimes a lot more. In order to find the true cost of the item, you have to add certain amounts, called burdens, onto the base cost. An easy example is freight. If you pay $1 to have the item shipped to you, then the true cost is actually $7 not $6. If you purchase the item from overseas, you may have to pay an import duty depending on the item's classification. Duty is expressed as a percent of the purchase price of the material. These burdens tend to be obvious. Two others that are much trickier are depreciation and overhead

If you purchase capital equipment, such as machinery to manufacture the product or a tool to mold the product, you have to expense a portion of the cost of the equipment in each unit you make. This calculation is based on a certain number of years (set by general accounting principles) and on projected sales over the useful life of the product. This is called depreciation and is usually expressed as a percentage of the material cost.

When you manufacture or even simply resell products, you also have to take into consideration the extraneous costs necessary to produce the product. Usually these consist of things like the electricity required to run the machinery (for a single unit!) and that portion of the rental of the building in which the operation is housed. We are only talking about the actual manufacturing, shipping, and receiving areas, however. The electricity and rent connected with the front office (sales, administration, marketing, and so forth) is accounted for elsewhere (and is immaterial as far as this puzzle is concerned). Sometimes companies also include salaries and expenses of the personnel involved with directing the back office operations: purchasing agents, supervisors, engineers, and their related expenses. These amounts are called overhead. Overhead is usually calculated by adding up the total expenses for a year and dividing by the value of the related component: material or labor. This is expressed as a percentage of the cost of the component, either material or labor. Many companies have gone broke because they didn't understand or recover their overhead costs properly.

In order to make things a little more fun, I am also going to ask to you to differentiate between two types of basic costs: labor costs and material costs. Labor means the time it takes for someone to transform the purchased material into something else. This can mean physically changing the shape or nature of the product or something as simple as taking it out of a big box, labeling it, putting it into an individual box and then putting it on a shelf. Material cost is simply the cost of the actual materials themselves. This company buys raw materials and bulk finished goods, but in each case they do something to it in order to transform it into what the customer actually buys. As you might guess, the overhead of bringing something into the warehouse is very different from the overhead of transforming it into something else.

In this example, we are going to consider a company that specializes in manufacturing geocoins and other accessories for the geocaching community. In addition to their core business, they also sell other items that they don't manufacture (like GPS receivers and books) since their customers expect them to have a full line of geocaching-related products. The company sells to various dealers/distributors who then sell to the final customer.

You are going to have a hard enough time keeping everything straight so I have made things (relatively) easy. You need not consider royalties, commissions, or anything that I have not described above. Although everybody on the manufacturing floor makes a different wage and the shipping folk make something else again, I have assumed a standard labor rate of $12.50 per hour. Assume that any benefits these people make are included in the overhead. We are not going to get picky about the overhead for different parts of the operation. We are simply going to use a 5.2% material overhead and a 39.4% labor overhead. I will not ask you to calculate depreciation; I simply give you the rate. You do not have to worry about bulk pricing, rebates, sales tax, promotions, or any thing like that. I give you all the other basic costs and figures necessary to do the calculations for a subset of eight items in their catalog. Two of these columns are red herrings and are immaterial to the final calculation. (Actually, four if you count the part number and description columns, but I presume that you can figure that much out.)

Out of all this mess, there is exactly one calculation I am worried about in my capacity of product manager. Other people worry about other figures and calculations. Those are important as far as the company is concerned but they don't pay me to look at them.

Now, you just have to figure out which calculation they do pay me to consider.

Note: There is nothing tricky here. I have not embedded anything funny in the part numbers or the specific digits. (Not that it wasn't tempting!) The coordinates are in the standard DD MM.MMM format, starting with the North and ending with the West. You simply have to do some math. I realize that there are percentages and fractions involved and that there may be pesky decimals that will change the exact answer. However, I should have constructed things to make it clear what the significant digits are. If not, send me your calculations and I'll advise.

I have tried to make the figures internally consistent and in sync with what I assume about the market for these products--just as I would in my real job. However, this is a puzzle and I've made up everything in order to embed coordinates into the calculations. Please don't run out and change your business practices or start accusing someone of cheating you based on the data you see here. Remember, people are allowed to make money in order to stay in business and provide services to the community.

It is entirely possible that someone may come up with some convoluted series of calculations that would give what would otherwise seem to be reasonable coordinates. If so, you will have impressed me and I will have impressed myself in coming up with something with two solutions. However, I doubt that the alternate coordinates would land you into the area described in the introduction. I apologize in advance.

[note 7/18/2010] It's a magnetic hide-a-key. I have no desire to rework this sucker, so there's an offset. Stand at the cache spot with the road at your back. At 2 o'clock-ish there is a concrete and metal thing. The cache is in the usual spot. I'm not clear why I didn't use this in the first place.