Answer (B) is correct.
IMA’s Management Accounting Glossary lists four categories of quality
costs: prevention, appraisal, internal failure, and external failure (lost
opportunity). Costs of prevention include attempts to avoid defective
output, including employee training, review of equipment design,
preventive maintenance, and evaluation of suppliers. Appraisal costs
include quality control programs, inspection, and testing. Internal failure
costs are incurred when detection of defective products occurs before
shipment, including scrap, rework, tooling changes, and downtime.
External failure costs are incurred after the product has been shipped,
including the costs associated with warranties, product liability, and
customer ill will.