Final answer:
The electricity used for cake ovens at a bakery is considered a unit-level activity, being directly associated with the production of each batch of cakes and increasing proportionally with output.
Step-by-step explanation:
The electricity used for the cake ovens at Bob's Bakery can be categorized as a unit-level activity. Within the context of activity-based costing, unit-level activities are those that occur every time a service is performed or a product is made. In the case of a bakery, powering the oven to bake cakes is done for each batch of cakes, and the consumption of electricity would increase proportionally with the number of cakes baked. This is in contrast to activities carried out on a per-customer basis (customer-level), per-product line (product-level), or per batch of goods regardless of quantity (batch-level).
To illustrate the concept, let's consider the fictional example of a Canadian worker who could produce 10 loaves of bread in an hour, potentially because of access to a large industrial-size oven. This advantage of a larger oven, in terms of the number of bread loaves produced, is an example of economies of scale, exemplifying how increase in scale can lead to higher productivity and lower costs per unit of output.