I don't charge my family for cakes, or cookies or anything else, ever. I don't understand the concept. They're family. My mother is a nurse and I call her for medical advice at least once weekly. Never once has she said to me, "My hourly rate is $xx.xx, so you owe me $xx.xx for this conversation." My grandmother has watched my daughter on numerous occasions and never once has she said, "Well, your regular babysitter charges $10 per hour and I had (daughter's name) for 13 hours overnight. That'll be $130, missy". My Father is a police officer and I have gone to him for legal help and advice on many occasions....
You get my point...
So, if I were you - and I'm not....but if I were....I'd say this,
"Listen, Mom...I'm totally for doing whatever I can for family, however, money's a little tight right now and the $20 you offered me just won't be enough to cover my expenses. It'll cost me at least $xx.xx to make this cake and I really need you to cover that amount. Of course, I will put the labor in as a favor to you. If you don't want to pay $xx.xx for the cake and cookie expenses, I'd be happy to go to the local bakery and help you pick out some decent products."
She may be crazy, she may be a witch....but she IS your mother. JMHO
***Edited to say***
I know some might blast me for this post. I, personally, just could not imagine asking someone who caried me for nine months, changed my diapers, washed my bottles, ran on 3 hours sleep a night, worked 2 jobs to support me, etc.....I just could never, ever ask her for money (above and beyond what it cost ME) to do her a favor. Same goes for any of my other family members who are always willing to help me, be there for me....without charging a fee for their time, energy or efforts.