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A line of furniture is made by the Drazal Company in South Carolina and is being considered for outsourcing to China. The unit manufacturing costs in the U$.$S$.$ are:

Unit Cost of Goods Sold

Direct Labor $53$

Materials $122$

Overhead $49$

Total $224$

When produced in China, direct labor will be $60$ percent of the U$.$S$.$ cost and overhead will also be $60$ percent of the U$.$S$.$ cost$,$ since it consists mostly of salaries. Materials costs will be $10$ percent lower in China. Transporting the furniture from China will cost $$27,000$ for seven containers to transport the annual supply of $500$ units from the factory in China to the Drazal warehouse in the U$.$S$.$ by rail, truck, and sea. To ensure quality, it will cost $$12,000$ per year to monitor the supplier and inspect the units in China before they are sent. The cost of administering the contract is $$5,000$ per year.

a$.$ What are the total costs of supplying this product from China?

b$.$ What risks are associated with the Chinese supplier?

c$.$ Should the product be outsourced to China?

d$.$ Why is it so expensive to make this product in China when the labor is so cheap?