Simple indexing

To Cut a Gear of 42 Teeth. Divide 40 by 42 which equals 40/42 or 20/21 turns, 40 spaces on a 42-hole circle or 20 spaces on a 21-hole circle. To use the rule given, select a circle having a number of holes divisible by the required fraction of a turn reduced to its lowest terms. The number of spaces between the holes gives the desired fractional part of the whole circle. When counting holes, start with the first hole ahead of the index pin.
NOTE: It is a good practice always to index clockwise on the plate.
Indexing = 40 /N
Blank diameter = module (no of teeth +2)
Working depth = depth of cut = 2.25 * module

Further reading

Direct indexing
Differential indexing
Angular indexing

Reference

http://www.tpub.com/content/armyordnance/od16448/od164480027.htm

http://www.eskills.net.ph/Cite/Milling%20Machine%20Operation/The%20Indexing/DIFFERENTIAL%20INDEXING/differential_indexing.html

http://skilledtradesmath.com/files/The_Indexing_or_Dividing_Head.ppt

http://metalworking.com/Dropbox/NAVY-repairmans-manual-Chapter14.pdf