That calculator doesn't seem to be very accurate, either. Hopefully I used it correctly, but my tests were as follows:
I took the Hammer of Atonement (
http://www.wowhead.com/?item=30918), with a given item level of 141, and plugged it in. It reported an item level of 260.1. I used the following numbers:
I also took the Lightfathom Scepter (
http://www.wowhead.com/?item=30108), with a given item level of 138, and plugged it in in the same manner. It reported an item level of 239.7.
Is there something I'm missing, or are others getting around the same over-budgeted values?