The manual that came with my Jeppensen E6B has the following sample...

If an aircraft is flying at 12,500 feet with an outside air temperature of -20C and the altimeter is set on 30.42 inches of mercury, what is the true altitude?

The explanation goes on to find a pressure altitude of 12,000 feet. After placing -20C over 12,000 we find 12,500 (12.5) on the B scale and read the true altitude of 12,000 (12.0) on the outer ring.

Looking closely at the outer ring, I see that the true altitude is actually just slightly below 12,000. Now for practical purposes I realize we don't worry about differences like this and round the result. But I'm working on a project in which I need to calculate the true altitude precisely. I'm having a difficult time finding the formula. The closest thing I have found says the correction is 4 feet per thousand feet indicated per degree off of ISA.

When I attempt to apply that formula to our sample problem I get 4 * 12.5 * -35 = -1750. Applying that correction gives a value far below expected so obviously I'm doing something wrong. Can someone straighten me out here? References to documentation with educational value are especially welcome.