Using a stand mixer fitted with the dough attachment, combine butter and sugar until smooth, approximately 2 minutes.

Next, incorporate the vanilla extract and egg, mixing thoroughly. While the mixer runs on low, add the milk and blend until just combined.

In a separate bowl, whisk together the flour, baking powder, and salt.

Gradually add the dry ingredients to the butter mixture, mixing on low speed. Pause occasionally to scrape down the bowl to ensure everything mixes evenly.

You'll know the dough is ready when it begins to pull away from the bowl's sides. If the mixture remains sticky, incorporate additional flour one tablespoon at a time.

Divide the dough into portions, wrap each in parchment paper or plastic wrap, and refrigerate for 1-2 hours. This important step helps your cookies hold their shape while baking.

Heat your oven to 375°F.

Sprinkle a light coating of powdered sugar on parchment paper. After chilling, briefly knead the dough and place it on the prepared parchment.

To prevent sticking, cover the dough with another sheet of parchment paper before rolling to approximately ¼ inch thickness.

Cut into shapes and transfer to a parchment-lined baking sheet.

Bake until the edges just start to turn golden, about 7-9 minutes. Let the cookies cool completely before decorating them (see below).

In a mixing bowl, combine the powdered sugar, meringue powder, and water, beating until thoroughly mixed.

The icing consistency can sometimes be challenging to get just right.

This recipe intentionally produces a thicker icing that's more manageable, particularly when decorating with children. If you find it too stiff to work with, gradually incorporate additional water (one tablespoon at a time) until you reach your preferred consistency.

Separate the icing into smaller bowls and incorporate food coloring gel to create your desired colors, then transfer to piping bags for decorating.

For flooding-style decoration (a technique where you fill in a bordered area with icing to create a smooth, flat surface), first pipe an outline around the edge of each cookie, then fill the center by working your way inward with icing.

If you notice any unfilled areas, use a toothpick to gently pull the icing into those spaces with circular motions.

While the icing is still wet, add sprinkles or other decorations if desired.

Allow the cookies to dry thoroughly (several hours to overnight) before stacking or storing them.