Another way to do this is to first draw your applique piece on freezer paper, including the wavy lines going across. Number your piece in some way, and you may want to make a copy so you can put the pieces back exactly as drawn. Cut the freezer paper along the wavy lines. Iron the pieces to the wrong side of fabrics. Rough cut, leaving up to 1 inch extra around the freezer paper. Start reassembling the pieces. What you want to do is turn under the seam allowance on a top piece and then machine applique this to an underneath piece. For the top piece, you probably want to trim the seam allowance to 1/4" and turn under with a glue stick.
Sharon Malec describes this technique better than I have in some of her books. Here is a link to her website:
http://www.malec-designs.com/