Put butter, peanut butter and chocolate chips in a large bowl and microwave for 2-3 minutes. Put a little cereal in a bowl and add a little bit of chocolate mixture and stir carefully. Do this until all cereal is coated.
Take a brown paper bag and put 1 cup of powdered sugar inside and add cereal mixture. Add 1 cup of powdered sugar on top of cereal and close bag and shake. Open bag and pull apart any stuck pieces and shake again. Store in tight fitting container.