Preheat your oven to 350°F.
Add butter to microwave-safe dish and microwave in 20-second intervals, stirring in between, until completely melted.
Meanwhile, cut your donuts into cubes, about 1-inch long on each side.
In a large mixing bowl, add milk, applesauce, granulated sugar, vanilla extract, and melted butter and stir until combined.
Add your cubed donuts to the mixing bowl and use a spatula or wooden spoon to toss, ensuring every piece is coated.
Transfer your breadpudding mixture to a 9x7 casserole dish and use a spatula to make sure the mixture is spread evenly across the dish.
Bake for 40-45 minutes, until the top just starts to brown. Sprinkle with powdered sugar(optional) and serve warm.