Which activity level does the use of indirect materials best correspond to in Activity Based Costing?

In Activity Based Costing (ABC), the use of indirect materials is best associated with the facility-level activity. Facility-level activities are those that support the organization as a whole rather than specific products or batches. Examples of these activities include factory management, building maintenance, and utilities, where costs are incurred to maintain the overall conditions necessary for production.

Indirect materials, such as cleaning supplies, maintenance materials, or general factory parts, can be utilized across multiple products and do not directly tie to a single unit of production, batch of products, or even a specific product line. Instead, they contribute to the overall operational capability of the facility.

In contrast, unit-level activities relate to costs incurred for each unit produced, batch-level activities are associated with groups of units produced in a single batch, and product-level activities involve costs tied to specific products regardless of the number of units produced or batches created. Thus, the nature of indirect materials aligns more closely with the facility-level activity in this costing approach.