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It is a simple economics logic. Higher the production units lower the cost. It is the total cost behaviour. Total cost per unit decreases as the increase in total number of units. Total cost includes fixed and variable cost. As China produces in bulk, its fixed cost gets divided among all the manufacturing units,results into lower cost.Rather in a giant country like China which is an overpopulated country, it is very easy to get cheaper labour. Yes, even India has higher labour power but most of the labour is engaged in farming where China promotes manufacturing and uses its man power at production industries.China is the first country to start SEZ units. China has actively opened its borders to foreign manufacturing investment. Thus, manufacturing companies get capital and open global market to market it's bulk production at cheaper cost. And as a basic principle 'cheaper cost increases the sales.' China gets huge revenue through 'bulk production cheaper cost method.'Thus, China can produce in huge quantity as it has cheaper labour, high technology and availability of capital in the market.Now compared to India, China has latest technology for production which adds for reduction of cost. In India, exice duty is payable on manufacturing which increases the cost. Not only excise but also other revenue taxes which add to the increase in cost. Even capital is not easily available.Hence, these factors adds to the cost of manufacturing in India.

"The total bill of materials, or cost of the iPhone 7's components, add up to $219.80, research firm IHS Markit said in a statement on Tuesday. The company estimated that actually building the iPhone 7 costs Apple $5, bringing its total manufacturing cost to $224.80. The price applies only to the 32GB iPhone 7 and is based on preliminary findings, suggesting IHS could change its estimate after it completes its final review.""At nearly $225, the 32GB iPhone 7 is relatively expensive, IHS says. In fact, the company noted in a statement in December that Apple's iPhone 6s, which launched last year, cost Apple less per unit, or $187.91, to produce."Source-- http://fortune.com/2016/09/20/iphone-7-cost/

Generally, manufacturing overheads are calculated per product annually.The first thing to note is the basic manufacturing overhead formula:Manufacturing Overhead = Total Indirect Costs / Total Units ProducedThe thing is, how do we work out these total indirect costs?Let’s take the example of a skateboard making business and see how to find the manufacturing overhead.Here are the example calculations:Indirect LaborThere’s a cleaner that comes in at the end of the month. That comes to $2000 a year.Indirect MaterialsLots of bits and pieces get used in the workshop that isn’t necessarily considered as direct costs; tapes for temporary fixes and bleach for cleaning.$500 a year.UtilitiesWorkshop rent, bills, taxes, etc. $12000 a year.DepreciationCalculate how much value is being lost on your assets.Since a workshop is being rented there’s no property to account for, but we do have some machinery.If a jigsaw is estimated to last seven years and it cost $1050, then we could say that the annual depreciation is:1050 / 7 = $150.It might seem a little off the wall, but to be fair this is a legitimate cost to your business.Now that we have all the numbers worked out, we can add them together and get our total indirect costs.2000 + 500 + 12000 + 150 = $14650 a year.And in this skateboard shop, there are 800 skateboards made a year.So, what is the total manufacturing overhead?Manufacturing Overhead = Total Indirect Costs / Total Units Produced = 17650 / 800 = $18.31Alternatively, there is Smart Manufacturing Software like Katana available on the market that can effortlessly and automatically make these calculations for you.