Beat butter or margarine and the 1/3 cup shortening in a mixing bowl with an electric mixer on medium to high speed for 30 seconds. Add sugar, baking powder, and salt; beat until combined, scraping sides of bowl occasionally. Beat in egg and the 1 teaspoon vanilla until combined. Beat in as much of the flour as you can with the mixer. Stir in any remaining flour with a wooden spoon. Divide dough in half. If necessary, cover and chill dough for 3 hours or until easy to handle.

Roll half of the dough at a time on a lightly floured surface to 1/8-inch thickness. Cut with 2-1/2-inch teapot- and teacup-shape cookie cutters or other desired cutters. Place cutouts on an ungreased cookie sheet.

Bake in a 375 degree F oven for 7 to 8 minutes or until edges are firm and bottoms are very lightly browned. Transfer cookies to wire racks and cool.

For decorating frosting, in a medium bowl beat the 1/2 cup shortening and the 1/2 teaspoon vanilla with an electric mixer for 30 seconds. Gradually add 1-1/3 cups of the powdered sugar, mixing well. Add the 1 tablespoon milk. Gradually beat in remaining 1 cup powdered sugar and enough of the 3 to 4 teaspoons milk to make a frosting of piping consistency. Color as desired with pastel paste food coloring. Decorate cookies as desired by piping on decorating frosting. Makes 36 to 48 cookies.

Bake and cool cookies as directed. Pack in an airtight container with waxed paper between layers; seal, label, and freeze up to 3 months. Thaw 20 minutes at room temperature before decorating.