Mrs. Franklin, who is in the 37 percent tax bracket, owns a residential apartment building that generates $114,000 annual taxable income. She plans to create a family partnership by giving each of her two children a 15 percent equity interest in the building. (She will retain a 70 percent interest.) Mrs. Franklin will manage the building, and value of her services is $34,000 per year. If Mrs. Franklin’s children are in the 12 percent tax bracket, compute the tax savings from this income-shifting arrangement. (Ignore any payroll tax consequences.)

Exercise 2-12 cost behavior; high-low method [lo2-3, lo2-4] speedy parcel service operates a fleet of delivery trucks in a large metropolitan area. a careful study by the company’s cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. if a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile. required: 1.& 2. using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (round the "variable cost per mile" to 3 decimal places.)