Preheat oven to 350 degree F and grease 2 regular muffin pans with nonstick cooking spray.
In a large bowl with an electric mixer or stand mixer, cream together the butter and sugar until light and fluffy for a few minutes. Be sure to scrape down the sides of the bowl with a rubber spatula.
Add in egg and extracts and beat again until smooth.
In a medium bowl, whisk together the flour, baking powder and baking soda.
Add the flour mixture to the wet mixture and mix until dough has formed. Be sure not to over-mix.
Press 2 tablespoons of cookie dough into the bottom of the cupcake pan and press half way up the sides with your fingers.
Bake cookie cups for 12 minutes and then let cool for at least 15 minutes. Press the back of a tablespoon or the top of a round spice jar down the center to form the cup shape. Let cool completely.
In the meantime, in a medium bowl beat together the cream cheese and butter with an electric hand mixer or stand mixer until smooth. Add in powdered sugar, vanilla extract and milk. Continue to mix together, then add food coloring gel (optional) until desired frosting consistency is achieved. Add more milk if its too thick and more powdered sugar if its too thin. The frosting should be able to form stiff peaks.
Add frosting to a piping bag with a star tip and swirl into each cookie cup. You could also add the frosting in with a spoon. Top with sprinkles (optional). Enjoy!