Jansung Company manufactures 5,000 telephones per year.The full manufacturing costs per telephone are as follows:

Direct materials

$2

Direct labor

8

Variable manufacturing overhead

5

Average fixed manufacturing overhead

5

Total

$20

Telecom America has offered to sell Jansung Company 5,000 telephones for $20 per unit.If Jansung Company accepts the offer, $12,500 of fixed overhead will be eliminated.

Applying differential analysis to the situation, should Jansung Company make or buy the phones?