Choice "C" is correct. In a quality control program, internal failure costs are incurred because nonconforming products and services are detected prior to being shipped to customers. Examples are rework, scrap, reinspection and retesting.
Choice "d" is incorrect. Responding to customer complaints is an external failure cost incurred because products or services failed to conform to requirements after being delivered to customers.
Choice "a" is incorrect. Statistical quality control procedures are appraisal costs incurred to detect defects.
Choice "b" is incorrect. Only rework represents an internal failure cost as described above.