Preheat oven to 160C (320F).

Grease and flour a 7-inch diameter round baking dish to prevent sticking.

Sift flour and salt together in a bowl.

Set the sifted flour mixture aside.

In a separate bowl, cream together margarine and sugar with a mixer at high speed until light and fluffy.

Add the eggs and vanilla extract to the creamed mixture and mix until well combined.

Gradually add the sifted flour mixture to the wet ingredients and mix until just combined. Avoid overmixing.

If the batter is too thick, add water and mix until the desired consistency is reached.

Divide the cake batter evenly into seven separate bowls.

Add a different food coloring to each bowl (red, orange, yellow, green, blue, pink, purple).

Mix each bowl of batter thoroughly until the color is evenly distributed.

Pour one bowl of colored batter at a time into the prepared baking dish, spreading carefully to the edge.

Repeat with the remaining colors, layering them gently without mixing.

Place the cake in the preheated oven and bake for approximately 1.5 hours, or until a wooden pick inserted into the center comes out clean.

Let the cake cool completely on a wire rack before frosting.

For the vanilla buttercream icing, cream together margarine and shortening in a large bowl until light and fluffy.

Add vanilla extract, icing sugar, and milk to the creamed mixture.

Mix well until smooth and creamy. Add more milk if needed to achieve the desired consistency.

Once the cake is completely cool, spread the vanilla buttercream icing evenly over the top and sides.