Operating budget consists of two parts, called as _________ budget and _________ budget

The correct answer is Programme, Responsibility.

Key Points The operating budget consists of two parts:

• Program budget
• Responsibility budget

Important Points Program Budget
The program budget describes the major programs that the company plans to undertake.

This budget is arranged by product line and shows the anticipated revenue and costs for each product. This budget helps to answer questions such as:

1. Is the profit margin on each product line satisfactory?
2. Is production capacity sufficient to support the organization's sales?
3. What can the company afford to spend on research?
4. Are adequate funds available?
5. If there are negative answers to any of these questions, the plan needs revising.

Responsibility Budget

• The responsibility budget sets out budget information by responsibility areas.
• It is, therefore, a control device (i.e., a statement of standard performance against which actual performance can be compared).
• The costs in a responsibility center will vary with volume.
• The responsibility budget shows the expected costs at various levels of volume.
• Also, responsibility budgets are prepared for a variety of other special purposes.

Hence, the correct answer is Programme and responsibility.