I've made quite a few rag quilts. The guys in the family just LOVE them! The largest square I've used is 7 inch with 6 inch finished. Here is what I do to make my squares.
Place back fabric wrong side up
Place batting cut to finished size of block
Place top fabric right side up
Place marker dots at the 1 inch mark on all four corners
Stitch from mark to mark making a square
Stitch across diagonal twice making an X inside the stitched square
Place blocks together and stitch along stitching line to make a row.
Hope this helps.