What is calculated by subtracting indirect costs from the contribution margin?

The calculation of net income involves taking the contribution margin and subtracting indirect costs. The contribution margin represents the revenue remaining after variable costs have been deducted from sales. By subtracting indirect costs—such as overhead expenses, administrative costs, and other fixed costs—from this margin, one arrives at the net income. This figure indicates the actual profit of the organization after accounting for all types of costs.

In this context, other choices do not align with the specific calculation described. Gross income is typically calculated before indirect costs are factored in and reflects income before these deductions. Volume projection is related to the anticipated sales or service volumes and does not relate to profitability calculations. The capital budget focuses on long-term investment decisions and financing rather than the calculation of income based on contributions and costs. Thus, the correct understanding of how these financial metrics relate confirms that what is obtained after these subtractions is indeed net income.