Specialty Glass, Inc.: Cost Accounting and Hazardous Wastes

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Specialty Glass, Inc.: Cost Accounting and Hazardous Wastes

A Business Case
presented to
Ms. Nancy Chua
Accountancy Department

In partial fulfilment
of the course requirements

Imperial, Glenn Paolo S.
Reyes, Joselle Marie R.

July 8, 2011

Producing about 30 percent of the world’s colored sheet glass, it is evident that Specialty Glass Inc. has a competitive advantage over other manufacturers of sheet glass. First, their capital investment provides an advantage as to their ability to use equipment that could provide better quality sheet glass. An example is through the use of day tanks in a 24-hour cycle and continuous furnaces which would increase the durability of stained glass. Moreover, continuous furnace requires high capital investment which prevents other competitors to acquire such and yet the company benefits from it because although it consumes a large amount of electricity the price paid for it is relatively low. Thus, this could increase their profits and shows an edge over other competitors. Second, the manufacturing process of Specialty Glass provides the company to have a regulated system because of a systematic flow of productions and use of materials. From the consumption of chemicals down to the formation of the glasses itself, to the disposal of ashes and hazardous chemicals collected from the baghouse and to the packaging of the finished glasses; each of these have their own significance to the process like the baghouse which acts as a filter for the hazardous wastes produced from the production and captures almost all of the toxins emitted in the air. Another is the recycling of some glasses which could increase profit and save cost because they are able to reuse some of the broken glasses, and lastly is the protection for the glass in order to ensure the safety of the glass sheets. Although these things require substantial cost in order to meet and comply to their manufacturing process. The costs incurred are necessary in order to bring larger profit and sales to the company. However, an issue regarding the manufacturing process these glasses tend to be an important or key factor in its production and completion. This issue is about the use of highly toxic chemicals that produce hazardous wastes to the air that affect our environment. One example is the continuous production of ruby-red which contains cadmium oxide that manufacturers around the world are avoiding because of the banned use in some parts of the globe, discontinued production, and the negative implication associated in connection with health issues that is why Specialty Glass is one of the only two manufacturers still producing such. The main problem in this issue is that the use of chemicals and colorants cannot be avoided in the production because it is an essential ingredient for the creation of colored sheet glass. Thus, They are not able to fully dispose or discontinue the use of the chemicals even if these things produce hazardous chemicals and wastes that cause many environmental problems. This could be the reason why Specialty Glass, even though it would be costly for them, tried to implement and venture to different alternatives that could minimize the effects and spread of these chemicals like the emission controls which became unsuccessful because the requirements needed for such operation could cost the life of the company. In response, the baghouse came into play, as it was used to capture 99.7% of the toxic particulates and it could be the only option for the company to be able to continue its production. The expenses they incur regarding the disposal hazardous wastes became a key contributor to the cost of the glasses. Specialty Glass determines the cost of the product through the direct labor and direct materials needed in producing different colors of sheet glass. In addition to these, they allocate a proportional share of overhead which includes indirect costs most especially the...
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