Heat oven to 350°F. In large bowl, beat granulated sugar, butter, milk, almond extract and egg with electric mixer on medium speed, or mix with spoon, until well blended. Stir in flour, baking powder and salt until dough forms.
Shape dough by 2 tablespoonfuls into 1 1/2-inch balls. Remove about 1/2-inch piece of dough from each. On ungreased cookie sheets, place larger balls about 3 inches apart. Flatten to 1/2-inch thickness with floured bottom of glass. Insert wooden stick into side of each. Shape small pieces of dough into triangles; press and flatten onto rounds opposite sticks to form hats.
Bake 12 to 15 minutes or until edges are light golden brown. Insert candies into cookies for eyes, nose and mouth. Cool 5 minutes; remove from cookie sheets to cooling racks. Cool completely, about 15 minutes.
Tint about 1/4 cup frosting with red food color. Frost hats; sprinkle with colored sugar. Add miniature marshmallows to tips of hats. Use additional frosting and candies, granulated sugar and coconut for brims of hats. Use about 1/4 cup white frosting and additional coconut for beards.