Answer: D — 12

We need arrangements of the letters of QUEUE (one Q, two U's, two E's) such that Q is immediately followed by U.

Glue Q to a U.

Treat "QU" as a single block. The remaining letters are one $U$ and two $E$'s. So we are arranging four objects: $\{QU, U, E, E\}$.

Count arrangements with the repeated $E$.

$\frac{4!}{2!} = \frac{24}{2} = 12$

(The two $E$'s are identical; the $U$ inside the QU-block is distinguishable from the lone $U$ by the constraint that one is preceded by Q and the other isn't.)