Step 1: In a large bowl, cream together the softened unsalted butter and granulated sugar with an electric mixer on medium speed for 3-5 minutes, until light and fluffy. Scrape down the sides of the bowl as needed.
Step 2: Beat in the egg and pure vanilla extract until just combined, ensuring no streaks remain.
Step 3: In a separate medium bowl, whisk together the all-purpose flour, baking powder, and salt.
Step 4: Gradually add the dry ingredients to the wet ingredients, mixing on low speed until just combined and a thick dough forms. Be careful not to overmix.
Step 5: Divide the dough into two equal disks, wrap tightly in plastic wrap, and refrigerate for at least 1-2 hours, or overnight.
Step 6: Preheat your oven to 375°F (190°C). Line baking sheets with parchment paper or silicone baking mats.
Step 7: On a lightly floured surface, roll out one disk of chilled dough to 1/4-inch thickness. Cut out desired shapes with cookie cutters. Place cookies 1 inch apart on prepared baking sheets. Gather scraps, re-roll gently, and cut more cookies.
Step 8: Bake for 8-10 minutes, or until the edges are lightly golden. For softer cookies, bake until just set. Let cool on baking sheets for 5 minutes, then transfer to a wire rack to cool completely.
Step 9: Prepare the easy royal icing: In a medium bowl, whisk together the sifted powdered sugar and meringue powder. Gradually add warm water, 1 tablespoon at a time, whisking until desired consistency is reached (thicker for outlining, thinner for flooding). Add food coloring if desired.
Step 10: Once cookies are completely cool, decorate with royal icing and sprinkles. Allow icing to dry completely (several hours or overnight) before stacking or storing.