Combine 1 cup butter,sugar, and egg in large bowl. Beat at medium speed, scraping bowl often, until creamy. Add orange juice and vanilla; mix well. Reduce speed to low; add flour and baking powder.
Beat until well mixed.
Divide dough into thirds. Wrap each in plastic food wrap; flatten slightly. Refrigerate until firm (2-3 hours).
Heat oven to 400F. Roll out dough on lightly floured surface, one-third at a time (keeping menaining dough refrigerated), to 1/8- to 1/4-inch thickness. Cut with 3-inch cookie cutters. Place 1 inch apart onto ungreased cookie sheets; sprinkle with decorator sugar (if desired). Bake for 6 to 10 minutes or until edges are lightly browned.
Combine powdered sugar, 1/3 cup butter and 1 teaspoon vanilla in small bowl. Beat at low speed, scraping bowl often and gradually adding enough milk for desired spreading consistency. Tint with food color, if desired. Frost and decorate cooled cookies as desired.