Into large bowl, measure cereal; set aside.
In 1-quart microwavable bowl, microwave chocolate chips, peanut butter and butter uncovered on High for 1 minute then stir.
Microwave about 30 seconds longer or until mixture can be stirred smooth. Stir in vanilla.
Pour mixture over cereal, stirring until evenly coated.
Pour half of the mixture into a 1 gallon ziploc bag.
Add powdered sugar. Seal bag; shake until well coated. Spread on waxed paper to cool.
Repeat for the second half of the mixture.
When cooled, melt your blue chocolate melts and drizzle over muddy buddies. Add Sprinkles.
Store in airtight container in refrigerator