Line baking sheets with waxed paper.
In a large bowl, mix cereal and pretzels.
In a medium, microwave-safe bowl, mix together butter, peanut butter and chocolate chips.
Microwave on HIGH for 20 seconds; stir. Continue microwaving 10 seconds at a time until mixture is smooth.
Pour over cereal mixture and stir until evenly coated.
Spread evenly on lined sheets and refrigerate, uncovered 20 minutes or until set. Break into bite size pieces.
Divide mixture between 2 one-gallon resealable freezer bags. Add 1/2 cup powdered sugar to each bag.
Seal and shake until well coated. Divide candies between each bag and gently shake bags to mix.
Store mixture in the refrigerator in air-tight containers.