The formula is in inches, LxWxHx.40. Yes, the volume of one cubic inch is 0.55 fluid ounces. But we are converting from a fluid volume to weight, and estimating the amount of oils needed to make enough soap batter to fill the mold. 0.55 fluid ounces of water also weighs 0.55 ounces (at sea level, but close enough for our purposes here), but 0.55 fluid ounces of oil does not weigh 0.55 ounces. It weighs less. 0.4 ounces of oil by weight will take up more volume than 0.4 ounces of water. If you add one gallon of water to one gallon of alcohol, you will have less than 2 gallons volume, even tho the weight will be the total of the 2 combined. Same principal with soap. Adding all the ingredients' weights together will give you the total weight, but the volume will be less than sum of the oils and lye water.
It is a good basic formula, not a hard and fast rule as there are a lot of variables. If you are taking a bit of a water discount, adjust your formula a bit to compensate. I know there is a different formula for using metric, I don't know it tho, but I am sure we can find it or do the math to figure it out if anyone needs it.