For the cookies: Sift together the flour, baking powder and salt. In a large mixing bowl, with an electric mixer, cream the butter and sugar until light and fluffy, about 2 minutes. Add the egg and mix until combined. Gradually add the sifted dry ingredients, one spoonful at a time, until thoroughly combined. Add the vanilla. Chill the cookie dough in the refrigerator for at least 1 hour.
Preheat the oven to 400 degrees F. Roll out half of the dough at a time, keeping the remainder of the dough in the refrigerator. On a lightly floured surface, roll out the dough to a 1/4-inch thickness and cut into desired shapes with a cookie cutter. (For medium cookies, use a 3-inch cookie cutter.) Place the cutout cookies 2 inches apart on an ungreased cookie sheet and put the cookie sheet in the refrigerator for a few minutes before baking. This will help the cookies to retain their shape. (You can roll out the scraps to make a few more cookies.) Bake until just before the edges of the cookies start to brown, 8 to 10 minutes (if baking two sheets at a time, rotate halfway through baking). Cool the cookies for 1 to 2 minutes on the cookie sheet before removing to wire racks to cool completely.
For the icing: In a medium bowl, combine the confectioners' sugar, meringue powder and warm water with a wire whisk. Stir until the icing is smooth. Adjust the consistency of the icing by adding more confectioners' sugar or more water, as needed. Add food coloring, if desired, to the icing.
Spread the icing on the cooled cookies and then top with assorted sprinkles and candies.
Meringue powder is available in a can. (I use Wilton.) It is used in place of egg whites in many icing recipes. From Food Network Kitchens: After further testing and to ensure the best results, this recipe has been altered from what was in the actual episode.
Recipe adapted from Home Cooking with Trisha Yearwood (c) Clarkson Potter 2010