In a large mixing bowl combine the baby cereal and the cornstarch. Stir with a whisk until completely combined. Add the applesauce and coconut oil to the bowl and stir to incorporate.
When the mixture is beginning to come together like dough use your hands to knead it together until all of the cereal mixture has been incorporated and the playdough is smooth and elastic. This will take 3-5 minutes.
Divide the dough into halves or quarters and place each ball of dough into its own small bowl. Add 1 whole pack of Kool-Aid powder to each 1/2 batch of dough and 1/2 a packet of powder to each 1/4 batch of dough.
While wearing kitchen gloves, knead each ball of dough, stretching and pulling the dough to work the color through. Once the color is evenly dispersed set it aside and repeat the process with the remaining portions of dough.The dough will appear glossy and should be allowed to rest for approximately 5 minutes before determining whether the dough is too sticky or dry to work with.