Preheat your oven to 350°F (175°C) and line a muffin pan with paper liners.
Whisk together flour, baking powder, salt, and shredded coconut in a bowl. Set aside.
Cream butter until pale, then add sugar and watermelon gelatin, beating until fluffy. Add eggs one at a time, then vanilla extract.
Gradually mix in the flour mixture and milk, alternating between the two. Add green food coloring.
Spoon batter into muffin pan, filling each about ¾ full. Bake for 18-22 minutes. Cool completely on a wire rack.
Spread melted white chocolate on each cupcake and refrigerate to set.
For the frosting, beat cream cheese and butter until smooth. Mix in vanilla extract, salt, confectioners’ sugar, Kool-Aid mix, and food coloring.
Frost each cupcake and garnish with mini chocolate chips and toasted coconut flakes.