I count anytime I have to be in the kitchen tending. So, while I may have to be in the kitchen to remove a cake from the oven you could, in all reality, leave for hours upon hours before returning to tend to it.
I can't think of any cooling cake that has to be "watched."
I guess it depends on your circumstances. I rent a commercial kitchen, I get charged a daily rate for keeping my work in progress cakes in the fridge or freezer above the shelves I rent in them for my goods. Because of that, 3 days of rental is included in my special occasion cake prices.
jen
When calculating the time it takes to make the cake, do you also count the time it takes for the cake to cool or just the time it takes to bake the item & then calculate the time it takes you to frost it?
If you're sitting there staring at the cake waiting for it to cool, then you should include that time in your labor cost for that cake, but the goal is to work out an efficient production schedule where you are doing something else productive while the cake is cooling. For example, if you work on cake #2 for an hour while cake #1 is cooling, the labor cost would be allocated to cake #2.
Also factor in such activities that pertain to all cakes (or to no specific cake). For example, general cleaning or washing your kitchen towels would fall under "overhead" because you need a clean kitchen and clean towels for all cakes, so the time expense for this activity is legit.
I've seen threads where people question whether they should bill for time "if they are doing something else" that isn't cake. As mentioned above, depends on what it is and things like doing laundry for towels, aprons, etc. should be billed .... 'coz if you weren't doing cakes, you wouldn't have that extra laundry to do. 
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