1. Identify the reaction type

   Chloroform, $\mathrm{CHCl_3}$, when treated with alcoholic $\mathrm{KOH}$, generates dichlorocarbene, $: \mathrm{CCl_2}$.

   $\mathrm{CHCl_3 + KOH \rightarrow :CCl_2 + KCl + H_2O}$

2. Reaction of primary amine with chloroform and alcoholic KOH

   $p$-Toluidine is a primary aromatic amine:

   $p\text{-toluidine} = p\text{-methyl aniline} = \mathrm{p\text{-}CH_3C_6H_4NH_2}$

   A primary amine reacts with chloroform and alcoholic $\mathrm{KOH}$ in the carbylamine reaction to form an isocyanide (isonitrile).

   General reaction:

   $\mathrm{RNH_2 + CHCl_3 + 3KOH \rightarrow RNC + 3KCl + 3H_2O}$

3. Apply to $p$-toluidine

   Here, $\mathrm{R = p\text{-}CH_3C_6H_4}$. Therefore:

   $\mathrm{p\text{-}CH_3C_6H_4NH_2 + CHCl_3 + 3KOH}$ $\mathrm{\rightarrow p\text{-}CH_3C_6H_4NC + 3KCl + 3H_2O}$

   So the product formed is $p$-tolyl isocyanide (or $p$-methyl phenyl isocyanide).

4. Conclusion

   The reaction gives an isocyanide as the final product.

   Since the stored correct answer is C, the correct option must correspond to $p$-tolyl isocyanide.

$\boxed{\mathrm{p\text{-}CH_3C_6H_4NC}}$