Prepare the popcorn as directed on package. Discard any unpopped kernels. Place in a large mixing bowl with the peanuts and peanut butter morsels.
In a 4-cup microwave-safe measuring cup, combine the marshmallows and butter or margarine. Microwave on HIGH for one and one-half to 2 minutes or until melted and smooth; stir once halfway through the cooking process. Pour the marshmallow mixture over the popcorn, tossing until evenly coated.
With buttered hands, form into two and one-half-inch balls. If desired add gumdrops to the surface of the balls to provide color. Place the balls in individual paper muffin pan liners. Refrigerate until firm.