A halfway decent DAC will cost closer to $50 than $1. Given the current market for marked-up mediocre headphones, I can much more easily see the parent's scenario than yours.
It's likely integrated with another chipset, but I don't imagine it's more than $10-20. However, to be standalone, there has to be a dedicated DAC, Amp, and power supply chipset, as well as the associated resistors and capacitors; which when not integrated into another package (like a phone motherboard) is not as cheap.
The least expensive USB set I've found in the past has run around $30, and you get what you pay for. Good enough for highly compressed voice communication, but terrible at rendering music.
