1cupunsalted butter(2 sticks, softened at room temperature)
12ouncescream cheese(softened at room temperature; 1 1/2 standard size packages)
5colors food coloring
12-16regular size marshmallows
To make the cake:
Preheat the oven to 350 degrees F and grease a 9-inch round cake pan with nonstick spray very well. (I use Classic Pam.)
Add the butter and sugar to a medium bowl. Beat with a hand-held electric mixer on medium-high speed until light, fluffy, and thick or about 3-5 minutes.
Add in the eggs one at a time, beating in between to fully incorporate each egg.
Add in the vanilla.
Add the baking powder, salt, and half of the flour to the bowl. Beat on the lowest speed. Add half of the milk. Beat on the lowest speed. Add the remaining flour and milk and beat on the lowest speed to just combine the batter. Gently fold in the sprinkles if using.
Add the batter to the prepared cake pan.
Bake for 24-26 minutes or until just golden brown around the edges and a cake tester inserted into the center comes out clean.
Remove from the oven. Run a knife around the edges, and invert carefully onto a wire rack to cool completely.
To make the frosting:
Add the butter, cream cheese, 1/2 cup powdered sugar, and vanilla to a large bowl. Beat with a hand-held electric mixer, starting on slow (to prevent the powdered sugar from flying all over!) and working up to high for 30-60 seconds or until well mixed and fluffy. Taste and add more powdered sugar as you like. (I usually use 1 cup.)
Place 1 1/4 cups of the frosting into a medium bowl. Add 1-2 drops food coloring (this is the top of the rainbow—I used red food coloring here) and stir to combine.
Divide the remaining frosting into 4 small bowls. Add 1-2 drops of the remaining colors of food coloring to each and stir to combine.
To assemble the cake:
Carefully place the cake onto a cutting board. Use a serrated knife to cut in half.
Use the red frosting to coat the middle of one half. Sandwich the other half on and place, cut side down and standing upright, onto a cake stand or platter.
Use the remaining red frosting to coat the top edge of the cake, hiding the seam.
Working your way down from the top edge of the cake, add each color of the rainbow. (It's okay if it's not perfect!)
Cut each marshmallow in half with scissors and place the sticky side onto the base of the sides as clouds.
Slice to serve.
This cake is best on the day it's assembled Cover any leftovers with plastic wrap and store at room temperature for up to 2 days or in the fridge for 3-5.
You can bake the cake the day before you plan to serve it. Let it cool fully on the wire rack, then place onto a plate lined with parchment paper and cover tightly with plastic wrap to make sure it stays fresh. (Or line a large airtight container with parchment paper and cover.) Store at room temperature.
I used gel food coloring from Wilton for bright colors. Any will work.