Preheat your oven to 180°C and line a 12-hole muffin tin with muffin liners.
Add ½ cup marshmallows to a microwave-safe bowl. Heat for 15-20 seconds or until they start to melt and form a gooey consistency. Do not overheat the marshmallows, or they will burn and become hard.
Add the oil and egg to the melted marshmallows and whisk vigorously until smooth.
Add the vanilla cake mix and ½ cup of warm water and beat until smooth.
Pour the batter neatly into the prepared cupcake liners, filling ¾ to the brim, and bake for 10-12 minutes or until risen and lightly golden brown on top. Once baked, remove the cupcakes from the oven and let cool.
Melt the remaining 1 cup of marshmallows in a separate medium-sized microwave-safe bowl.
Add the store-bought frosting to the melted marshmallows and mix vigorously until smooth.
Spoon the frosting on top of each cupcake. Use a butter knife to spread the frosting into a neat layer.
To garnish, cut the remaining marshmallows diagonally in half. Sprinkle the sprinkles in a dipping bowl and dip the sticky side of the marshmallows into the sprinkles. Stick 2 marshmallow halves, sprinkle-side up, on each cupcake to resemble bunny ears.