1. Sift dry ingredients together. Combine the butter, milk, and egg and add to the dry ingredients.
2. Knead lightly on a well-floured board. Roll out to 1/4 inch thick and cut out dough with a doughnut cutter or shape by hand. Roll scraps into small balls.
3. Fry in vegetable oil heated to 350 F, turning the donuts once until both sides are golden brown. Serve warm plain or roll in sugar.