For cupcakes: Preheat oven to 325 degrees. Sift flour, baking soda, salt and cocoa powder in a medium bowl. Mix well and set aside.
Using a stand mixer fitted with the paddle attachment, combine sugar, vegetable oil, eggs, red food coloring, apple cider vinegar, vanilla and water in bowl and mix until smooth. Add flour mixture. As flour mixture incorporates, pour in buttermilk. Scrape down sides of bowl and mix until smooth.
Line cupcake pan with liners and scoop 1/4 cup batter into each. A 1 1/2-oz. to 2-oz. ice cream scoop works well. Bake for 18 to 22 minutes, rotating the pans halfway through. Cupcakes are done when the tops are springy to the touch and a toothpick comes out clean. Let cool 10 minutes before removing from pan. Set on a cooling rack until completely cool, an additional 40 to 50 minutes. If you're in a hurry, let cupcakes cool on the rack for 10 minutes before placing them in the refrigerator for an additional 15 to 20 minutes. It is important that they cool completely or the frosting will slide off the tops.
For frosting: Sift powdered sugar into a medium bowl. Set aside.
Using a stand mixer fitted with the paddle attachment, beat butter and vanilla on medium speed until creamy. Add cream cheese and mix on medium-low until smooth but not airy. Reduce mixer to low and add powdered sugar 1 cup at a time. Scrape down sides of bowl with a rubber spatula between cups of sugar. Mix on low speed until smooth. Refrigerate until firm enough to use, generally 30 to 40 minutes. If you are in a hurry, pour finished frosting into a flat cake pan lined with plastic wrap and place in the freezer. Be careful: This can freeze the frosting pretty quickly.
When cupcakes are cool and frosting has set, scoop 3 to 4 tbsp., depending on your preferred cake-to-frosting ratio, onto each cupcake. Use a small offset spatula or butter knife to spread and smooth the frosting. If you're feeling adventurous, use the spatula to create a swirled design. Top with red sprinkles.
Tip: Make the frosting the night before, so it has time to set before you frost the cupcakes.
To make a cake rather than cupcakes: Preheat oven to 325 degrees. Spray 3 (6-inch) round cake pans with vegetable oil. Line each with a parchment circle on the bottom and spray lightly and evenly once more. Fill each pan one-quarter way, about 1 to 2 cups batter for each pan, and bake 15 to 20 minutes or until cake springs back when lightly touched and a toothpick comes out clean. Let cakes cool completely. When cool, fill with cream cheese frosting between each layer and chill for about 20 minutes. Next, coat entire cake with cream cheese frosting and let chill for another 15 minutes. (This step will hold crumbs from the cake in place for a smooth, flawless finish when the final coat of frosting is applied.) Add a final layer of cream cheese frosting around the entire cake. Decorate and garnish as desired.
Makes 24 medium cupcakes or 1 (3-layer) cake