Here are the letters in one of the arrangements I tried. I hadn't trimmed them yet in this picture. I kept moving that cake around and just couldn't decide exactly where to put it.
I finally decided on this layout.
I used white thread and a meandering stitch to quilt it and pink for the binding.
I had a piece of the cupcake fabric left that was almost big enough for the back, so I decided to add white to make it work. I will use it as a wallhanging or topper, so it doesn't really matter what is on the back. Only had one little problem when I put it on the quilting frame.