In estimation and costing, the estimator must understand production cost, including labour and material cost of products, as well as discounts on purchases in order to:

Understanding Production Cost in Estimation and Costing:

In estimation and costing, it is essential for the estimator to understand production costs, including labor and material costs, as well as any discounts on purchases. This knowledge is crucial for several reasons, but the primary objective is to accurately determine the overall cost and profitability of a project.

Here are the given options and their relevance:

1. Retain a list:

   This is not the primary reason. Retaining a list may be part of record-keeping, but it is not the main objective of understanding production costs.

2. Prepare schedules:

   While preparing schedules is important, it is not directly related to understanding the detailed costs of labor, materials, and discounts.

3. Work out profit:

   This is the correct reason. Understanding the production costs, including labor, material costs, and discounts, allows the estimator to calculate the total cost accurately. This, in turn, enables the calculation of profit by comparing the total cost with the selling price or revenue generated.

4. Gain knowledge:

   Gaining knowledge is a broader objective and not specific to the task of estimation and costing. The knowledge gained is used to work out profit effectively.

Conclusion:

The primary reason for understanding production cost, including labor and material cost of products, as well as discounts on purchases, is to:

3) Work out profit