your frined Margarch has been working For acily of years accountant for humb mor considering 13 firm and currently sole practitioner up her Johnployment contract provides a salary of 60,000 but no pension. up One good thing about leaving the city firm would be that she will not have to pay 1,500 for her season ticket and 10 each day for lunch. Margarete is sorry that she has already entered into a 3 year contract at a city health spa for 2,000. Perhaps the best aspect of giving up annual working days are 200. her city job is that she will save 3 hours travelling time each day. Her The need for a decision has become urgent as a local solicitor has offered her the use of an office with services in return for Margarete working on their files for 700 hours each year at 30 per hour, for 3 years. The office is near her flat and she could walk to work and go home for lunch at an estimated quarter of the cost of lunch at her current employment. All she would need is a computer and stationery. She bought a computer six months ago for 2,500 including all the software she might need. In the same period, she also paid 2,000 for the right to use the city firm's computerised knowledge database. She has a quote for stationery from a local printing provider. For 5,000 in the first year and 3,000 a year thereafter, she would get a full package including cards, letter headings, newsletter etc. There would of course be other expenses for which she has budgeted 2,000 per year. She was confident from referrals she had received from her previous clients that she would have no problem in bringing in fees of 50,000 a year. Margarete has produced a budgeted income statement but has turned another perspective. to you as a management accountant to look at her decision from (d) Prepare for Margarete a relevant cost statement comparing staying in her current employment with working on as a sole practitioner. Advise Margarete on your findings. Your relevant cost statement should cover a three year period and should include a note of why you have included or excluded various items she mentioned. (Provide your cost statement in an outline table with headings, e.g. cost, , relevant cost, non-relevant cost and prompt explanations).