In a large bowl, mix butter, cream cheese and egg. Add cake mix, mix until well blended. Divide dough in half. Add food coloring to half of dough.
For each cookie, measure 1 tsp white dough and 1 tsp red dough. Roll out each into 4 inch ropes. Place ropes side by side. Lightly roll together; twist. Place 2 inches apart on ungreased cookie sheet. Shape each to resemble candy cane.
Bake at 350 degrees for 7 to 9 minutes or just until edges are golden brown. Immediately remove from cookie sheets.