For head, secure marshmallow to apple with a toothpick. Cut licorice into two 1-1/2-in.-long pieces for arms and two 3-in.-long pieces for legs (save remaining licorice for another use). Secure arms and legs to apple with toothpick halves. For hair, combine 2 drops yellow food coloring and 3 drops water in a small resealable bag. Add coconut; toss to coat.
Spread a small amount of frosting on top of marshmallow. Press coconut hair in place. Dip chocolate chips in frosting; insert into marshmallow for eyes. Cut a wedge of cherry into a smile; dip in frosting and place on marshmallow.