Mix powdered sugar and water to create a thick icing. Add more sugar or water, if necessary to achieve desired thickness. You want a thick icing.
Fill plastic baggie with icing. Cut a small snip across a corner.
Start with the bottom. Use your icing to attach the bottom graham cracker to your base (cardboard wrapped in foil, or a sturdy paper plate). Use two half graham crackers for the sidewalls, a full graham cracker for the back, and another one for the top. Tip: add the back wall, then prop it up with a cup while you add the side walls.
Let graham cracker stable sit until icing has had a chance to set up (15-20 minutes)
Assemble Mary, Joseph, Shephards, and Baby Jesus while the graham cracker stable dries. To create these figures, slide gumdrops onto a toothpick. Baby Jesus is two gumdrops wrapped in a piece of fruit by the foot, resting on a small piece of graham cracker.Trim off the excess toothpick with scissors, if desired.Mary and Joseph are 3 gumdrops.The shepherds are 3 gumdrops with a fruit by the foot head covering. We also added a mini candy cane as a staff.
The angel has two candy canes for wings.
Use icing to attach the figures. Add a couple of animal cracker animals. Allow them to dry. Prop them up if necessary, but they should dry in about 5 minutes or so.
Sprinkle toasted coconut around for straw.
Video
Notes
Toasted coconut: heat oven to 375 degrees. Toast coconut 10-12 minutes, checking every so often and stirring to prevent burning.