In Activity Based Costing, which type of activity involves the use of indirect materials and consumables?

In Activity Based Costing (ABC), facility-level activities are those that support the overall organization and are not tied directly to a specific product, batch, or unit. These activities often involve the maintenance of the facility and the provision of resources necessary for the production process, which includes the use of indirect materials and consumables.

Indirect materials, such as lubricants, cleaning supplies, and other consumables, are essential for maintaining a functioning production environment but cannot be traced directly to a specific product or batch. Instead, they are used across many products or processes, making them part of the broader facility-level activities. These costs are necessary for sustaining overall production capabilities and are incurred even when no units are produced.

Other types of activities, such as unit-level, batch-level, and product-level activities, focus on direct costs that can be more easily assigned to specific products, processes, or batches. Thus, they do not typically encompass the indirect aspects associated with facility maintenance and resource management, which is why facility-level is the appropriate classification for activities involving indirect materials and consumables.