Standard costing is a method for determining costs using predetermined standards for materials, labor, and overhead costs. It involves setting standards, comparing actual costs to standards, and analyzing variances. Standards are set based on careful estimation of efficient operations and are used as benchmarks to measure performance and identify areas needing improvement. Standard costs are determined for direct materials, direct labor, and overhead costs by considering factors like past data, technical estimates, and market trends. The analysis of variances between actual and standard costs provides management important information for decision making.