In activity-based costing (ABC) systems, an activity refers to any operation performed within an organization that causes costs to be incurred. Examples include processing an order, writing a letter, designing a product, and visiting a customer. This concept is integral to accurately allocating costs based on actual activities.
In cost accounting, unit-level activities are those that are performed each time a unit is produced. These include tasks directly correlated with the production volume, such as machine operation and direct labor.
