I would charge the same price as if it were actual cake. There isn't much difference in the price of ingredients and the price of styrofoam - the money is in the time spent decorating. How much is that worth to you?
). So I guess $50 wouldn't really be too pricey for a dummy cake. . .although the customer may not think the same way. 
With a dummy cake you don't have the baking, cooling and the torting part. But you replace that will finding the dummy and the cost of it.
You will still use the same amount of icing to decorate it and you will still use the same amount of time dercorating it. I also sometimes find dummy cakes harder to handle since they are so light weight.
I would definetely charge very close to what I would for a real cake. Just because it is not cake under the icing does not mean it should be cheap.
If she balked at $32 I'd let her go and see if she can find someone else to do it for her. It will take time away from your family and your life for very little in return.
Try finding a local craft store with a cake decorating section, or you can find them online. I've ordered several from a supplier in Utah - but why pay so much shipping for styrofoam if you can find it local?
At the bake shoppe that I used to work at, we charged the same price for dummies that we did for real cake. The owner felt that the same amount of time went into it regardless of if it was eaten or not.
Personally, I think I would go half of what it would be per slice if it were real cake. Just my opinion.
Here's a link that sells them http://www.taylorfoam.com/taylorfoam_com/cakedummies/item.nhtml?profile=cakedummies&UID=102
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