Preheat oven to 400°. Line 3 baking sheets with parchment paper.
In the bowl of a stand mixer fitted with the paddle attachment, beat butter and confectioners’ sugar at low speed, slowly increasing to medium, until fluffy, 3 to 4 minutes, stopping to scrape sides of bowl. Add egg and vanilla, beating until combined.
In a medium bowl, whisk together flour, baking powder, and salt. With mixer on low speed, gradually add flour mixture to butter mixture, beating until a dough forms. Scrape down sides of bowl, and knead 3 to 4 times to make sure well combined.
Divide dough in half; cover one half with plastic wrap. On a heavily floured surface, roll remaining dough to ¼-inch thickness. (Lightly flour top of dough if it sticks to rolling pin.) Using a 3-inch crescent moon cookie cutter, a 3½-inch cloud cookie cutter, and a 3½-inch star cookie cutter, cut dough, rerolling scraps as necessary. Using a small of set spatula, place cookies at least 1 inch apart on prepared pans. Repeat with covered dough.
Bake, one batch at a time, until lightly browned, 7 to 8 minutes. Let cool on pan for 5 minutes. Using a large of set or flat metal spatula, transfer cookies to a wire rack, and let cool completely.
Dip cooled cookies facedown into Royal Icing; pull straight out, then lightly shake back and forth, letting excess icing drip off. Quickly flip cookies icing side up; using a wooden pick, spread icing into an even layer, removing any bubbles as needed. Using tweezers, place silver and white sugar pearls and gold star sprinkles into wet icing, as desired. Let stand for at least 4 hours or until icing is dry. Using edible marker, draw sleeping faces on cookies, if desired.*
Notes
*If Royal Icing is not completely set, the marker will break the icing surface. Test on one cookie first; if icing breaks, let dry another hour. Press very lightly with marker.
Recipe by Southern Lady Magazine at https://southernladymagazine.com/heavenly-sugar-cookies-recipe/