Heat oven to 350°F. Coat baking sheets with nonstick vegetable-oil cooking spray.
Roll dough out with floured rolling pin on well-floured surface to 1/4-inch thickness. Using a 2-1/2-inch baby-chick-hatching-from-egg cookie cutter, cut out cookies. Place cookies 1 inch apart on baking sheets. Gather scraps together, reroll and cut out more cookies.
Bake in 350°F oven for 8 to 10 minutes or until lightly golden around the edges. Cool the cookies on the baking sheet on a wire rack for 5 minutes. Then remove the cookies with a spatula to a wire rack and let cool completely.
Prepare Royal Icing. Reserve 1/2 cup icing. Thin remaining icing with water, adding one drop of water at a time, until the icing is the consistency of sour cream. Divide the thinned icing into batches; tint with the food paste colors as desired.
Using small fine-tipped paintbrush, start at one edge of cookie and brush the thinned icing across the cookie to the opposite edge, covering the cookie completely. Add a little more water if the icing does not flow smoothly. Repeat with the remaining cookies, using different colors. Let the cookies stand for several hours or overnight for the icing to harden.
Tint reserved unthinned icing as desired. Scrape into a pastry bag fitted with a thin writing tip. Pipe eyes and beaks onto cookies. Dip the edges of the cookies into colored sugar if desired.