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First prepare a white cake batter. If you are making a larger
layered design such as the size below you will need to make two
batches of 13x9. Coloring each layer a different color. A batch of
batter will also make 2 round cakes so you can divide your batter
in two separate bowls and add different colors to each half. Then
pour into your prepared round pan and bake.
Color your white cake batter the same way you do the icing. Rub a small amount of color on a toothpick or a small drop if using a liquid color. Remember it doesn't take a lot to get a nice color, so just start with a touch at first. Blend the color into your batter until well combined. Pour in your greased prepared pan and bake as usual.
Lay the bottom layer on your plate or serving platter and add a layer of frosting. Then add the top layer. Decorate!
You can use this idea to create rainbow
I like to use food gels or liquid food coloring for this decorating method.
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