- In a medium bowl, add the milk, sugar, and yeast, stirring to combine.
- In a separate medium bowl, add the butter, eggs, and vanilla extract, stirring to combine.
- Add the milk mixture to the egg mixture and whisk to combine. Transfer to a large bowl and add the flour in thirds, stirring between each addition.
- Dump the dough onto a lightly floured surface and knead for 5 minutes, until smooth. Gently poke the dough with a finger--the dough should bounce back up from the indentation.
- Place the dough in a large bowl, and lightly coat the dough with oil. Cover the bowl with plastic wrap
- Let the dough rise in a warm place for an hour, or until doubled in size.
- Take the dough out and knead on a floured surface for 5 minutes until smooth. Place the dough in an oiled bowl and repeat with rise overnight in the refrigerator.
- Roll out the dough on a floured surface until ¼ inch (6 mm) thick.
- Cut out the doughnuts and donut holes with a cookie cutter and piping tip.
- Melt enough margarine over medium heat to come up just 2 inches (5 cm) up on the side of a heavy frying pan. Heat the margarine to 375°F (190°C).
- Fry the donuts and donut holes for 45 seconds on each side, or until golden brown.
- In a bowl, combine the powdered sugar, dry milk powder, vanilla extract, and hot water until smooth.
- Strain the glaze through a fine-mesh sieve to remove any lumps.
- Dunk the donuts in the glaze or drizzle the glaze on top