Free cash flow : It describes the net cash provided from operating activities after making required adjustments for dividends and capital expenditures. In other words, it is the cash flow arrived after making payment for capital expenditures and dividend payments. To Calculate: Free cash flow for M Corporation.

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Answer 1

Question

Chapter 12, Problem 12.3DIE

(a)

To determine

Free cash flow: It describes the net cash provided from operating activities after making required adjustments for dividends and capital expenditures. In other words, it is the cash flow arrived after making payment for capital expenditures and dividend payments.

To Calculate: Free cash flow for M Corporation.

(b)

To determine

To Explain: The reason why free cash flow provides better information than “Net cash provided by operating activities”

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Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Answer 2

Question

Chapter 12, Problem 12.3DIE

(a)

To determine

Free cash flow: It describes the net cash provided from operating activities after making required adjustments for dividends and capital expenditures. In other words, it is the cash flow arrived after making payment for capital expenditures and dividend payments.

To Calculate: Free cash flow for M Corporation.

(b)

To determine

To Explain: The reason why free cash flow provides better information than “Net cash provided by operating activities”

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Answer 3

Question

Chapter 12, Problem 12.3DIE

(a)

To determine

Free cash flow: It describes the net cash provided from operating activities after making required adjustments for dividends and capital expenditures. In other words, it is the cash flow arrived after making payment for capital expenditures and dividend payments.

To Calculate: Free cash flow for M Corporation.

(b)

To determine

To Explain: The reason why free cash flow provides better information than “Net cash provided by operating activities”

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 12, Problem 12.3DIE

(a)

To determine

Free cash flow: It describes the net cash provided from operating activities after making required adjustments for dividends and capital expenditures. In other words, it is the cash flow arrived after making payment for capital expenditures and dividend payments.

To Calculate: Free cash flow for M Corporation.

(b)

To determine

To Explain: The reason why free cash flow provides better information than “Net cash provided by operating activities”

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 12.3DIE

(a)

To determine

Free cash flow: It describes the net cash provided from operating activities after making required adjustments for dividends and capital expenditures. In other words, it is the cash flow arrived after making payment for capital expenditures and dividend payments.

To Calculate: Free cash flow for M Corporation.

(b)

To determine

To Explain: The reason why free cash flow provides better information than “Net cash provided by operating activities”

Answer 6

Chapter 12, Problem 12.3DIE

(a)

To determine

Free cash flow: It describes the net cash provided from operating activities after making required adjustments for dividends and capital expenditures. In other words, it is the cash flow arrived after making payment for capital expenditures and dividend payments.

To Calculate: Free cash flow for M Corporation.

Answer 7

Chapter 12, Problem 12.3DIE

(a)

To determine

Free cash flow: It describes the net cash provided from operating activities after making required adjustments for dividends and capital expenditures. In other words, it is the cash flow arrived after making payment for capital expenditures and dividend payments.

To Calculate: Free cash flow for M Corporation.

Answer 8

(b)

To determine

To Explain: The reason why free cash flow provides better information than “Net cash provided by operating activities”

Answer 9

(b)

To determine

To Explain: The reason why free cash flow provides better information than “Net cash provided by operating activities”

Answer 10

Expert Solution & Answer

Answer 11

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Answer 12

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Answer 13

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - Prob. 4Q Ch. 12 - Prob. 5Q Ch. 12 - Prob. 6Q Ch. 12 - Why is it necessary to use comparative balance...Ch. 12 - Prob. 8Q Ch. 12 - Prob. 9Q Ch. 12 - Prob. 10Q

Solution Summary: The author explains that free cash flow is calculated by deducting capital expenditures and dividends paid from net cash provided by operating activities.

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To Explain: The reason why free cash flow provides better information than “Net cash provided by operating activities”

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