Nokia Ringtone Maker app allows you to create ringtones from the music on your phone. You can select your favorite song and save it as a ringtone after editing editing them the way you want. It now supports music file formats like WMA, M4A, M4R, and AAC along with MP3. The app which was in beta has now graduated to Windows Phone Store.
Download it here from Windows Phone Store for free from your Lumia device.