Also place 2 cups powdered sugar in a large Ziploc bag.
In a small pot, melt butter, peanut butter, vanilla, chocolate chips and butterscotch chips on LOW heat until smooth and well combined, stirring the entire time.
Pour melted mixture over Rice Chex and mix well until all the cereal is evenly coated.
Pour this mixture into the bag of powdered sugar and shake until all the cereal is coated.
Spread over waxed paper to cool.
When ready to serve mix with 1 cup of Holiday M&Ms. You can use regular milk chocolate M&Ms like we did or the White Chocolate Peppermint M&Ms or Holiday Mint M&Ms.