The word EQUATION consists of 5 vowels and 3 consonants.
5 words can be arranged in 5!
$5!=5\times 4\times 3\times 2\times 1$
3 consonants can be arranged in 3!
$3!=3\times 2\times 1$
The two block of vowels and consonants can be arranged in 2! ways
$\therefore$ The number of words which can be formed with letters of the word EQUATION so that vowels and consonants occur together
$\Rightarrow 120\times 6\times 2$
Hence (C) is the correct answer.