Combine Unsalted Butter (1 cup) and Cream Cheese (8 ounce) in the bowl and of a stand mixer and beat until fluffy. Add Granulated Sugar (1 1/2 cup), beat until even fluffier. Add Egg (1), Vanilla Extract (2 teaspoon) and mix well.
In a separate bowl combine the All-Purpose Flour (3 1/2 cup), Baking Powder (1 teaspoon), and Kosher Salt (1/2 teaspoon). Add it to the butter and cream cheese mixture and beat until just combined.
Transfer a quarter of the dough to the center of a piece of a wax paper.
Pat into a disk, wrap tightly, and chill for at least an hour and up to three days.
Preheat your oven to 325 degrees F (160 degrees C).
Roll out our dough on a lightly floured surface or in between parchment paper to 1/2-inch thick.
Cut out your cookies with cookie cutters of your choice. Gather scraps, re-roll, and repeat process.
Bake on a parchment paper sheet for 15 to 18 minutes, or until the edges just begin to turn golden—cookies will be very pale.
Remove them from the pan and transfer to a wire rack. Cool completely.
Meanwhile, stir together the Powdered Confectioners Sugar (1 cup) with Milk (1 tablespoon). You may add more milk a tablespoon at a time to achieve a thick but pourable consistency. Spoon icing onto the cookie, spreading to cover. Shower with Sprinkles (to taste). Enjoy!