Find the length by measuring the distance around the mug.

Add an extra 1/2" for a seam allowance.

Measure the sides to the height you'd like.

Add an extra 1/2" for the seam as well.

Once you have the template created, cut out one piece of batting and two pieces of fabric. 

With right sides together, sew a 1/4" seam all around the edges, leaving a couple of inches open on one side.

Turn the mug cozy right side out.

Turn under the edges of the fabric on the open side.

Place a piece of elastic cording about 2.5" long in the middle of the open end.

Sew a nice 1/4" topstitch around all four sides.

Give it a few back stitches to make sure it's sewn in well.

Hand sew a large button on the opposite side to complete the enclosure.