Preheat oven to 325°. Line a large baking sheet with parchment paper and set aside.
In a large bowl, add the peanut butter, milk and egg. Stir well until mixed.
Add the flour and baking powder. Mix well to incorporate all of the ingredients.
Knead the dough 8-10 times until it is firm and elastic. You can knead directly in the bowl or if you prefer, on a level workspace.
Sprinkle 1 Tablespoon of flour onto your workspace and place the kneaded ball of dough on top. Flatten the dough a bit and sprinkle the crumbled bacon and oats on top. Knead the dough 4-5 more times to distribute the bacon and oats.
Using a rolling pin, roll the dough out to 1/4 in thickness. Cut out 12 dog bone shapes with your cookie cutter and place on the lined baking sheet.
Bake for 20 minutes and cool on a wire rack.
Store in an airtight container in the refrigerator for up to 1 week. These also freeze great for up to 1 month.