The correct option is A used up
A phrasal verb is a verb combined with an adverb or preposition (or both) to provide a variety of meanings. In the given sentence, "used up" is a phrasal verb, it's a combination of verb (used) + adverb (up) and it means 'depleted, exhausted'; hence option B is correct. "They used" is a combination of subject and verb, whereas a phrasal verb consists of an adverb/preposition; hence it's not a phrasal verb and option A is incorrect. "All the" is a phrase made of a determiner (all) and an article (the), hence it's not a phrasal verb and option C is incorrect. "Leftover material" is a phrase made of adjective (leftover) + noun (material), it's not a phrasal verb hence option D is incorrect.