Preheat oven to 180C conventional or 160Oc fan-forced. Line 12 x 1/3 cup capacity muffin tin with cupcake patties.
Sift the dry ingredients into a large bowl. Add the sugars and stir to combine.
Add the egg, milk, oil and vanilla and beat until combined. Add the boiling water and mix until just combined.
Pour the batter into each patty case until 3/4 full.
Bake for 20-22 minutes or until cake skewer inserted into the centre comes out clean. Allow to cool.
TO MAKE BUTTER CREAM ICING: Beat butter with icing sugar using an electric mixer and light and fluffy. Beat in vanilla essence and milk until smooth, adding extra milk or icing sugar if necessary.
To make ears, pour sprinkles onto a small plate. Using scissors, cut each marshmallow diagonally in half. Press the cut side of the marshmallow half into the sprinkles.
To decorate, pipe or spoon a generous amount of butter cream onto each cupcake. Reserve 1/4 cup of icing. Place coconut on a plate and gently press the cupcake (buttercream side down) into the shredded coconut until completely covered. Using the remaining icing, apply a small amount to each ear to fix into place.