DVD spec limits the total amount of content for menus etc (menu itself, highlights, motion) to 1 gig. This is the size after it is all processed. Encore predicts how large that will be when it has finished processing, and warns you when that size will be too large.
Changing the sizes of the source files for motion assets, sound, etc, does not help your end result. You set the properties for Encore to use to process in the project setting "default transcode." And in DVD, you have only the choice of the maximum video plus audio bitrate. I do believe you will reduce the size of the menu total by reducing that max, but you will also reduce quality.
It is important that your project setting is for ac3 audio.
Your problem, it seems to me, is that a menu wth a "whole song," that also has video, even if short, and multiplied by 12 such menus, is using a huge amount of space for that content.
You can control some of that if you use highlight only menus, and render the menu background ahead into m2v's and a3c. But that can be difficult.
To experiment, "save as" your project, then remove the video from all your motion menus. If you still get the "menu exceeds limit," your audio alone is a problem.