Take the bottom half of the ocarina body (the piece with the flattened area), and position the mouthpiece against it. The bottom of the ocarina's body needs to have this flat space; this makes aligning the mouthpiece to the voicing easier.
The mouthpiece can be slanted (usually to the left) or at a right angle to the body.

While holding the mouthpiece in position, trace around its outline using tool #6.

Use the slot stick as a guide to make a straight cut. (cutting line is indicated by the arrows in the above photo) Cut the other three sides freehand. Use tool #7.

The cut-out extends around to the side. This is where the mouthpiece will be seated when the ocarina is assembled.

More views of the cut-out space for the mouthpiece.