Frost each cupcake with a thin layer of vanilla frosting. Pour red sprinkles into a small bowl and dip the lower third of each frosted cupcake into the sugar to make Santa's hat. Create a white rim for the hat by placing about 6 white chocolate chips, flat-side up, at the edge of the red sugar section. Stick 1 white chocolate chip on the top as a pom-pom.
Place 2 mini chocolate chips in Santa's face for the eyes and a red candy-coated chocolate piece for the nose. Sprinkle coconut flakes over the bottom third for the beard.