Walter,
That would be the standard formula. However, current speed, water depth, casting distance, and a host of other factors will determine whether or not you need to change the butt section. For indicator nymphing I would gather the butt section is stagnant and does not change. However, fishing by competitive means would require you to adjust the butt section. About the material sinking, if you coat it with muculin it floats great and can act as an indicator as Davy showed me.