I inserted the circle from the panel and sized them to 4 inches then copied and pasted to get two circles.

I then grabbed another circle and made it much smaller, once again copied and pasted 3 times so that two of them  could be made smaller to fit inside 2 of the other small circles.  I then aligned them horizontally and grouped them.

After grouping them I hit the combine subtracted at overlap.

I then sat them just above the top of the larger circle so that the inner circle was quite touching the larger circle, I hit combine and unite.

I had pictures of a cat and dachshund and traced around them so that I could put each of them inside the larger circles and placed them where I wanted.

I then went the the shapes and grabbed a heart, traced around it and resized to the larger sized heart, copied and pasted 4 times and resized each one and copied and pasted again.  I then placed them in the circle above each of the dashy and cat, grouped and then adjusted where I wanted them.  I then adjust the circle to the position I wanted and grouped.

I changed the size of the stencil to suit the size of the mugs my friend uses, these can be resized to whatever size you are wanting.

for the cutting process I ignored one so that i could do a test cut.  The cut perfectly!

Once finished I varnished them with a tint only varnish.