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Heat your oven to 375 degrees.
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Beat together the butter, sugar, and powdered sugar until fluffy.
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Add the egg and vanilla.
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In a separate bowl, mix together the flour and baking powder, then slowly add to the butter mixture.
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Roll into 1 inch balls, and roll into colored sugar to coat.
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Place on baking sheet and push down each ball slightly with a cup.
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Bake for 10 minutes