How is gross margin calculated?

Gross margin is calculated by determining the income that remains after accounting for the direct costs associated with producing a product or delivering a service, which are primarily variable costs. Option B accurately reflects this as it represents the estimated income above these variable costs. This figure is crucial for businesses as it indicates how efficiently a company is producing and selling its goods.

By understanding gross margin, businesses can analyze their profitability at a more granular level, which is essential for making informed decisions about pricing, production, and overall financial strategy. It helps in assessing how much revenue from sales is available to cover fixed costs and contribute to net income. Thus, option B correctly captures the essence of gross margin calculation by focusing on the relationship between income and variable costs.