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1. Preheat oven to 325 degrees F. In a large bowl, beat butter with an electric mixer on medium to high speed for 30 seconds. Add powdered sugar, baking powder, and salt. Beat on low speed until combined, scraping side of bowl occasionally. Beat in the 1 cup macadamia nuts and the coconut. Beat in as much of the flour as you can with the mixer. Using a wooden spoon, stir in any remaining flour (dough will be sticky).
2. Using lightly floured hands, shape dough into 1-inch balls. Place balls 2 inches apart on an ungreased cookie sheet; flatten balls slightly. Lightly press additional chopped macadamia nuts onto the tops of cookies.
3. Bake in the preheated oven for 18 to 20 minutes or until light golden brown. Transfer cookies to a wire rack; let cool. Makes about 32 cookies.