Combine butter, sugar, egg, orange juice and vanilla in bowl. Beat at medium speed, until creamy. Add flour and baking powder. Beat at low speed, scraping bowl often, until well mixed.
Divide dough into thirds. Shape each third into a ball; flatten slightly. Wrap each in plastic food wrap; refrigerate at least 2 hours until firm.
Heat oven to 400°F.
Roll out dough on lightly floured surface, one-third at a time (keeping remaining dough refrigerated), to 1/8 to 1/4 inch thickness. Cut with 3-inch round ornament cookie cutter. Place 1-inch apart onto ungreased cookie sheets. Bake 6-8 minutes or until edges just begin to turn lightly browned. Cool completely.
Place candy coating in deep 1-quart saucepan. Cook over medium-low heat 5-8 minutes, stirring occasionally, until melted. Remove from heat.
Dip top one-third of a few cookies at a time into melted coating; shake off excess. Place onto waxed paper. Immediately, before coating hardens, decorate dipped portions to create hats. Repeat with remaining cookies.
Decorate as desired using candies to create eyes, nose, cheeks and mouth. Attach candies to cookies with a dab of melted candy coating. Let stand 15 minutes to allow candy coating to harden.
Store in single layers in loosely covered container.