I'm not entirely sure where your confusion lies.
The Mechanical Size provides all the spec's you'll need.
Merely set up a 12" x 3" document, ensure you have a .156" bleed (.312 / 2), and that's it.
To factor the safety area, grab the rectangle tool, click the artboard once and the rectangle pop up should appear. Input the safety area measurements (11.812 x 2.812') and click OKAY.
Then align that resulting rectangle to be centered both vertically and horizontally to the artboard. Finally turn the rectangle into guides by choosing
View > Guides > Make Guides.
That should give you the overall file set up with the artboard the size of the
live area, red guides for the
bleed area and cyan guides for the
As for PPI.. if you are creating only vector content within Illustrator you don't need to worry about PPI.
If you are placing raster images into this Illustrator document, you will want to ensure all raster images are at 400ppi before you place them in Illustrator. And then do NOT enlarge placed raster images within Illustrator. Enlarging a 400ppi image within Illustrator will lower the image PPI.
If you intend to use built in effect in Illustrator such as drop shadows, blurs, and glows, you will want to adjust the Document Raster Effects Settings in the Effects Menu.
Set this to "other" then 400ppi.
Note that this only alteres raster items created within Illustrator this setting does not alter any placed raster images.
CS6 screenshots, but it's all the same in CC, windows may look slightly different that's all.