I think I may have seen this in the latest issue of Crafts n things. I'm sure I embellished it a bit to make it a bit of my own. I'll have to hunt the magazine down to see it again. Any rate, it is inspired by that magazine.
The white circle is needle felted in a round cookie cutter. The nose is orange roving that is wet felted in one long strip, then cut into pieces for the nose and needle felted in.
Eyes are buttons and the scarves are felt blankets or jacket wool and machine sewn on. Mouth is hand stitched.
Your kids can help make it b/c the cookie cutter makes it a safer needle felting experience.