HEAT oven to 350°F. Line muffin pans with paper baking cups. Prepare cake mix according to package directions using water, oil and eggs. Divide evenly into prepared muffin cups.
BAKE 19 to 23 minutes or until toothpick inserted in center comes out clean. Cool 10 minutes. Remove to wire rack to cool completely.
FILL decorating bag fitted with small star tip with red frosting. Fill another decorating bag fitted with medium star tip with white frosting. Pipe red frosting starting at center of cupcake, moving in spiral motion to mound frosting 1 1/2 inches high leaving room for border. Pipe white frosting to make border. Sprinkle border immediately with candy bits from frosting. Pipe small white star on top of hat.