What's wrong with my math?
 

1. Exported FCP using Compressor.
2. 1:59:12 movie squished using Apple preset DVD 120min Highest Quality Mpg2 with AC3 audio. (fits 2 hours on DVD-5)
3. MPEG file is now 4.16GB & AC3 file is 164MB
4. DVDSP default opening file size is 168 Kb
5. Chosen Menu Template shows 20MB
6. Total Assets should equal about 4.4GB, right?
7. But DVDSP shows 4.8GB and after attempting burn, error says I exceeded media capacity by 50MB.

What gives?

Not sure. Do DVD's have the same parameters as external drives where when you buy a 250 GB drive, you can only use 232?

Compress your audio AC3 file to Dolby Digital 2.0 using Compressor. This will shave about 100 megs off your audio file and allow you to burn your DVD within spec.

Your 4.4 vs 4.8 confusion could be another example this:

One layer capacity is about 4,310 of "1024" size megabytes vs 4,800,000,000 intividual bytes

Dolby Digital 2.0 is AC3 audio.

The only thing that's going to fix this is to re-encode the video at a slightly lower bitrate.

The guidelines in the presets are only just that. guidelines. If you're cutting it close, either be prepared to do very exact math and then include a buffer zone, or be prepared for multiple encodings.

As Don said, this is probably due to discrepancies in how file sizes are calculated. A blank single-layer DVD holds 4,700,000,000 bytes minus any formatting overhead, which is 4.7 GB in modern terms but only 4.37 binary gigabytes or "gibibytes". For a more thorough explanation see the following link, including a note about Windows continuing to use the old binary standard. (Which is now technically incorrect.)

http://en.wikipedia.org/wiki/Mebibyte

here is how it works
 

Minutes = disc capacity (GB) x 400
--------------------------
Bit rate (Mbps)

Don’t forget about audio, so if you like to use 6Mbps video compression and 1536kbps (48kbps PCM) you need to ad 7.536 into the formula.

4.7 x 400 = 1880 = 1 hour, 23 minutes, 9 seconds
--------- -----
7.536 x 3 = 22.608

If you know how long will be your program, you can calculate the maximum possible bit rate.

Maximum bit rate (Mbps) = disc capacity (GB) x 400
-----------------------
Minutes x 3

For example
4.7 x 400 = 1880 = 5.22 Mbps
---------- ----
120x3 = 360

With that information, means that encoding your video @ 5.0Mbps with a 128kbps Dolby Digital audio stream you have a perfect amount of space left over for the menus.