In large bowl, beat butter and powdered sugar with electric mixer on medium speed until fluffy. On low speed, beat in flour and peppermint extract.
On ungreased cookie sheet, pat dough into 6-inch square, about 3/4 inch thick. Cover; refrigerate 30 minutes. This is VERY important because the dough needs to be cold in order for the cookies to keep their shape and not spread out into one big cookie. I'd even recommend freezing it instead of just putting it in the fridge.
Heat oven to 325°F. On cookie sheet, cut dough into 8 rows by 8 rows, making 64 squares. With knife, separate rows by 1/4 inch.
Bake 28 to 35 minutes or until set and edges are just starting to turn golden. Meanwhile, in small bowl, mix crushed candy and granulated sugar.
In small food-storage plastic bag, add melted candy coating. Seal bag; cut tiny hole in corner of bag. I used a small cup to hold the plastic bag to make it easier to pour the candy coating into the bag. See picture below.
Remove cookies from oven. Cool for 10 minutes. Do not remove cookies from cookie sheet. Pipe candy coating over cookies. Before candy coating sets, sprinkle candy mixture over cookies. Place cookie sheet on cooling racks. Cool completely, about 30 minutes.