What you need:
1 round laundry basket that will fit around your kid
1 yard fabric for the 'cupcake liner'
1 yard fabric for the icing
A bag of fusible batting
A bag of stuffing
Glue gun & glue sticks
First, cut out the base of your laundry basket with your razor.
Next, take your cupcake liner fabric (I chose hot pink with glittern) and drape it over the basket. Use your hot glue gun to glue in place. I glued the top down and then the bottom up, leaving space to tie my ribbon onto the 'bars' on the basket. Cut lengths of ribbon and tie them at every 1/4 mark on the basket (make sure they're long enough so that when you tie them cross-wise, they'll fit over your kid's shoulders).
Now you're going to make the base for your icing. Take your batting and cut it into rectangles that will fit when wrapped around your 'cake' - I did 2, 1 was more stuffed than the other so that the pillow part would be too tall in the front. Put the stuffing in the middle of the batting and old one side over top. Seal all sides shut with your glue gun.
Once you've made your 2 pillows, glue them to the cake. I left gaps in between so that I could easily glue my icing color down.
Now that you have the pillows attached to your cake, take your icing fabric and drape it over top of your pillows. I used a nice plush fabric for this. Glue into places in the gaps where you glued your pillows on and then glue anywhere else that you feel needs stabilizing.
And there you have it! Your own cupcake costume!