This analysis plays a crucial role in managing procurement costs, making informed decisions, optimizing cost structures, and maintaining positive cash flow. Management can use standard costs to prepare the budget for the upcoming period, using the past information to possibly make changes to production elements. Standard costs are a measurement tool and can thus be used to evaluate performance. As you’ve learned, management may manage “to the variances” and can manipulate results to meet expectations. Standard costs are estimated goals that are used to calculate how much a product