wrap the felt around your mug to determine the height and width you need. cut a piece of each color so that it evenly goes all the way around the mug with about 1.5 to 2 inches over.(for the handle) the piece that the design goes on, stays whole. the other, cut in half. ( for me, the red stayed whole to put my logo on and the black i cut in half)
(sorry not too good a pic) wrap the whole thing around the mug and lay flat next to the handle on one side with the overage hanging over the handle on the other. use your fingers to determine where the handle begins and ends under the felt and lightly draw a line. determine the width and cut out the pieces where the handle needs to go. once you've cut them out, it's easier to see if more needs to be cut.