Mix granulated sugar, shortening, milk, lemon peel and egg.
Stir in flour, baking powder, baking soda and salt.
Heat oven to 400 degrees.
Shape dough into 1-1/4 inch balls.
Place about 2-inches apart on ungreased cookie sheet, and flatten each to about 2-1/2 inch in diameter, with greased bottom of a beverage glass dipped in sugar.
Bake until edges are light brown, 8 to 10 minutes; then let cookies cool completely before frosting them.
Spread cookie with small amount of Creamy Frosting.
Sprinkle top third of cookie with red sugar (to make Santa's cap).
Press on miniature marshmallow for tassel of cap.
Press 2 chocolate chips for the eyes, and 1 red cinnamon candy for the nose.
Sprinkle bottom third with either flaked or shredded coconut, for the beard.
Frost and decorate each cookie before starting another.
Creamy Frosting: Mix 3 cups powdered sugar, 1 teaspoon vanilla extract, and 4-6 tablespoons milk; mix until desired consistency. (I actually used: 3 cups plus 6 tablespoons of powdered sugar, 6 tablespoons plus a 1/2 tablespoon of milk, and the 1 teaspoon of vanilla extract.)
Note: I baked my cookies on Pampered Chef Stoneware, and baked the first 2-3 batches for 10 minutes, and the last 2 batches for 9 minutes, as the cookies were starting to brown up a bit more.