There is a product out there called "perfect circles," which is essentially heat resistant plastic circles with a hole in the center. You trace the circle you need on the back of a piece of fabric, cut around leaving and 1/8" to a 1/4" inch seam allowance, and then stay stitch in the seam allowance leaving a tail, pull the thread and gather..wallah a perfect circle. Before you get the template out, spray some starch and press to make sure the circle retains its shape, then remove the template and applique away. You can probably achieve the same results with a cardboard or some heat resistant template if you can cut a perfect circle
