Combine donut mix, water and butter in a large bowl. Mix until dough is formed. Shape dough by rounded teaspoons into tightly rolled balls. Place on prepared baking sheet.

Bake at 375° for 10-12 minutes. Allow to cool for 2 minutes.

Mix milk and glaze packet. Dip each donut into glaze and coat evenly. Remove donut and allow excess glaze to drip off. Place donuts on wax paper-lined baking sheet or cooling rack: immediately sprinkle with candy bits.

Let stand for 5 minutes before serving.