A is corrent. Spoilage is an example of producing substandard products but discovering the lack of quality prior to shipment to the customer.
B is incorrect. Appraisal costs are costs associated with quality control and include testing and inspection.
C is incorrect. External failures are costs incurred for products that do not meet requirements of the customer and have been shipped to the customer.
D is incorrect. Prevention costs are costs of any quality activity designed to do the job right the first time.
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