The Chateau Company manufactures 4,000 telephones per year. The full manufacturing costs per telephone are as follows:

Direct materials $ 4
Direct labor 16
Variable manufacturing overhead 12
Average fixed manufacturing overhead 12
Total $44

The Quick Assembly Company has offered to sell Chateau 4,000 telephones for $31 per unit. If Chateau accepts the offer, $20,000 of fixed overhead will be eliminated. Chateau should:

Make the telephones; the savings is $4,000
Buy the telephones; the savings is $35,000
Buy the telephones; the savings is $24,000
Make the telephones; the savings is $24,000