Cake produced by graduate following dance (3,4)
I believe the answer is:
rum baba
'cake' is the definition.
(rum baba is a kind of cake)
'graduate following dance' is the wordplay.
'graduate' becomes 'ba'.
'following' is a charade indicator (letters next to each other).
'dance' becomes 'rumba' (rumba is a kind of dance**).
'ba' after 'rumba' is 'RUM BABA'.
'produced by' is the link.
(Other definitions for rum baba that I've seen before include "sort of tipsy-cake" , "Rich cake" , "Spirit-soaked sponge" , "Soaked sponge dessert" , "Sweet" .)