This cute little pattern was found on a blog and I’ve made some alterations based on my first attempt.
Original pattern link

Any worsted/aran/dk weight yarn may be used here. I used mostly scrap Cascade 220 and some dk cotton/wool that I had left over.

Knitted Flat:
Using base color:
CO 6
KFB across (12 sts)
P
KFB, K1 across (18 sts)
P
KFB, K1 across (27 sts)
P
KFB, K2 across (36 sts)
P
KFB, K2 across (48 sts)
P
K
K (to create purl ridge for fold line)
Skirt: continue in K1, P1 ribbing for 18 rows or about 2.25”
Bind off firmly in purl. Leave long tail for seaming skirt.
Body: Change to bodice color (may also choose a belt color seperate from bodice if you like)
On wrong side (knit side of base will be out when skirt is flipped up), Pick up and knit 36 stitches opposite the the purl ridge of the fold line.
St-st 3 rows (P, K, P) (in belt color if desired)
(change to bodice color if doing belt)
K4, K2tog across (30 sts)
St-St 3 rows (P, K, P)
K3, K2tog across (24 sts)
P
K1, K2tog across (16sts)
(change to head color- leave long enough tail to seam later)
St-st 3 rows (P, K, P)
KFB, K1 across (24 sts)
P
KFB, K1 across (36 sts)
St-st 7 rows (P,K,P,K,P,K,P)
K4, K2tog across (30 sts)
P
K3, K2tog across (24 sts)
P
K1, K2tog across (16 sts)
P
K2tog across (8 sts)
Leave long enough tail to seam head, threading through live stitches as if to purl.
Using mattress stitch to seam, right sides of fabric out, Seam skirt and head completely. Leave bodice unseamed until end.
Arms (make 2)
Using bodice color:
CO 8
St-St 8 rows
change to head color
K
P
K1, K2tog, K last 2 stitches (6 sts)
P
Thread tail through live stitches as if to Purl, seam arms and attatch to bodice near top where head meets body.
I prefer to stuff the head and add any facial features at this point (before stuffing and seaming closed bodice)
For eyes: Using about 8” yarn, form a loop as if to tie a knot, yarn crossing at top of loop. Don’t pull tight yet, cross both ends of yarn around the loop a 2nd and 3rd time. Now gently pull knot tight to form large rounded knot for eye. I place pins in my dolls head to help visualize placement before securing eyes. After completing facial features, stuff bodice and seam closed. Another little trick I liked was cutting out a disk from thick cardstock, the same circumference as the base of the cupcake, and placing it at the bottom of the bodice before stuffing and seaming. This made a flatter base so my cupcake would sit flat.
For hair: I took a piece of cardboard about 5” wide and wound my hair yarn around it several dozen times. Then, at one of the sides I used thread that had been doubled to sew across all of the strands I had wound around. Then I backstitched over the area several times to form basically a part. Slipped this bunch off the cardboard and placed on dolly’s head. Then sewed the hair onto the head using the same part. Cut the bottom loop of yarn and trimmed hair to liking.
For cupcake hat:
CO 48 sts
K1,P1 ribbing for 4 rows
change color
K
P
KFB, K2 (64sts)
P
K
P2tog, YO to last 2 sts, P2tog (63 sts)
K
P
Use a 3rd needle (smaller sized and circular is easiest) to pick up the 48 purl bumps of the CO color, farthest from the CO edge. You’re going to graft your 63 live stitches to these 48 sts in a manner simliar to the 3 needle bind off, but without binding off. The pattern to go across your live stitches is K2tog, K2, joining 1 stitch each time from your picked up purl bumps. You should now have a nice picot edging on your cupcake and 48 sts on your US 3 needle. On the next row(purl row), increase 8 sts evenly across to 56 sts total.
K
P
K
P5, P2tog (48 sts)
K
P4, P2tog (40 sts)
K
P3, P2tog (32 sts)
K2, K2tog (24 sts)
P
K1, K2tog (16 sts)
P
K2tog (8)
Thread tail through as if to purl and use tail to seam hat. Add sprinkles if desired.