Heat oven to 375 degrees F. Coat baking sheet lightly with no-stick cooking spray. Combine flour, sugar and baking powder in a large bowl. Add shortening. Beat with electric mixer on low speed until shortening is completely blended into flour mixture. Add milk, egg and lemon extract, mixing just until blended.
Roll dough into 1-inch balls. Place 1-inch apart on prepared baking sheet. Bake 10 to 12 minutes or until lightly browned. Cool completely on baking sheet on wire rack.
For frosting: Beat powdered sugar, shortening, 2 tablespoons warm milk and lemon extract in medium bowl with electric mixer on low speed until blended. Beat in additional warm milk, a little at a time, until desired consistency. Spread on top of cookies.