Housing and Community Development (HCD) Practice Exam

When are charges for labor to install carpets typically excluded from a dealer's cost?

1. When the dealer performs the labor

2. When the labor is performed outside of the dealership

3. When the customer pays directly for the labor

4. When the dealer is licensed for such installations

The correct answer is: When the dealer performs the labor

In the context of charges for labor to install carpets being excluded from a dealer's cost, when the dealer personally performs the labor, those charges are typically not included in the dealer's cost structure. This is because the labor conducted by the dealer is considered an in-house service, meaning the dealer absorbs those costs as part of their overall business operations instead of passing them directly onto the customer as a line item expense. This arrangement can benefit the dealer as it provides a more streamlined pricing structure for the customer and allows the dealer to manage their labor costs internally. By not including these charges in the dealer's cost, it reflects a focus on the product price rather than a separate labor charge that could complicate the transaction. In contrast, labor performed outside the dealership, paid directly by the customer, or dependent on licensing does not inherently pertain to the dealer absorbing those costs in-house. These scenarios would have different implications for how labor charges are processed within the overall cost structure of the dealer's accounting.