In a medium bowl, whisk together 2 cups of all-purpose flour and 1 teaspoon of baking powder. In a separate bowl, beat 1 cup of softened butter and 1 cup of granulated sugar until light and fluffy, about 3-4 minutes. Add 1 large egg and mix until well integrated. Gradually fold in the dry ingredients along with 1 cup of colored sprinkles. Chill the dough in the refrigerator for 45 minutes.

Preheat your oven to 350°F (175°C) while the dough chills. On a lightly floured surface, roll out the chilled dough to about 1/4 inch thick. Use your favorite cookie cutters to cut shapes from the dough, then carefully transfer them onto parchment-lined baking sheets. Leave a bit of space between each cookie.

Bake the shaped cookies in the preheated oven for 8-10 minutes, until edges are lightly golden. Remove cookies from oven and cool on baking sheet for a few minutes before transferring them to a wire rack to cool completely.

While cookies cool, prepare the creamy dip. In a mixing bowl, beat 8 ounces of softened cream cheese and 1/4 cup of softened butter until smooth and creamy. Gradually add 1 cup of icing sugar while mixing, followed by 1 teaspoon of vanilla extract and enough milk (about 2-3 tablespoons) to reach your desired dip consistency. Gently fold in 1/2 cup of colorful sprinkles.

Once the cookies are completely cooled, serve with the prepared creamy funfetti dip on a large platter.