Mix the butter, butterscotch sauce, sugar, vanilla, and butter extract together until well whipped. While mixing, add the powdered sugar 1-2 cups at a time, mixing all the time. Mix the milk into the frosting to get the right consistency.

Separate the M&Ms into four piles. Red for Gryffindor, green for Slytherin, blue for Ravenclaw and yellow for Hufflepuff. Use the cookie cutter to cut out a circle in the top of each cupcake, saving the part you remove.

Add M&Ms for one of the houses to each cupcake and then replace the circle of cake. Frost the cakes with Butterbeer frosting.

Unwrap three small Tootsie Rolls per sorting hat. Place them in a microwave-safe bowl and microwave them for 5-10 seconds. You only want to warm them up a little, not melt them, so watch them closely.

Roll the tootsie rolls together in your hand until they are smooth. Pinch off a part of the tootsie roll and roll it out. Use the cookie cutter you used to cut the cupcake to cut out a circle for the bottom of the hat. Pinch off a small piece and set to the side. Mold the rest of the Tootsie Roll into a cone and then curve the top. Use the small pinch to create the face for the sorting hat.

Place a Sorting Hat on top of each cupcake.