Would it honestly surprise you to know that someone who owns a site about inedible doughnuts actually already has Bandai's Kona-Pun Donuts Kitchen ($24)? Right, I didn't think so. I'll spare you the story of how one of my sisters and I spent part of a weekend last year, then, and just say that you and/or your kids would seriously love this toy.
Playing with miniature food is already fun on its own, I know, but the Donuts Kitchen takes it to a whole new level by letting you actually make the doughnuts yourself. You get to mix the doughnut powder with water, pour it into molds, "fry" them in an oil-like liquid, and decorate them with icing (see photo below). It's adorable.
The only drawback is that the doughnuts need to be thrown away. They don't ever "dry up" completely, so keeping them for too long would probably result in some very moldy-looking chocolate sprinkles.