I am creating dummy cakes for my shopfront and some of the designs call for carving or sculpting, what is the best way to carve styrofoam without wasting too much to flaking and what do you use to stick two pieces of styrofoam together because I tried using topbond and the foam started melting- was disastrous! 
LOL!
I use old fashioned white glue to put styrofoam layers together. Set a heavy weight on them for a while, so they dry flat and together, then you're ready to carve. A very sharp knife or an electric knife can be used. If a chunk breaks off, glue it back on, remembering to allow time for it to dry (it will break off again if you try to carve it. If the piece needs shaping do it before you glue it back on). If the layers or shape needs refining, you can do it with fondant pieces. I use a tiny bit of Karo syrup as glue then place the fondant on the dummy and smooth it into place, then you're ready to apply the fondant. HTH
I usually just used b'cream OR royal (which I seldom have on hand) both to glue pieces together & to ice them.
As for carving: minor changes & smoothing are best done w/a small hand-held electric vibrating sander.
There are places on the net where you can buy ready made shaped styro - maybe expensive but probably worth the time & sanity saved 
I saw with a bread knife, it's crude, but if I need a really smooth surface I do an extra step and cover the styrofoam form with RI, let it dry and then sand the RI smooth. I've done this several times on things that are small. Gives a beautiful surface to cover with the fondant.
I tried to do this awhile back. Lets just say it would not get smooth! Someone suggested Taylor foam! They have dummy sets are cheap and worth every penny!
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