D is corrent. Appraisal costs are costs associated with quality control and include testing and inspection.
A is incorrect. Prevention costs involve any quality activity designed to do the job right the first time.
B is incorrect. Internal failures occur when substandard products are produced but discovered before shipment to the customer.
C is incorrect. External failure costs are incurred for products that do not meet requirements of the customer and have been shipped to the customer.
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