I used a lot of styrofoam at one time, it's easy to cut compared to wood. Not a big fan of hot knifes, because it's hard to keep the cut square with the piece, not to mention slow. I've heard of people making a hot knife out of a car battery and coat hangers. What worked great for me is a jig saw with an aggressive blade cuts clean and keeps everything square on the sides. Use the 4x8 pink sheet foam over the white kind that comes apart in little beads. The thing is styrofoam is so fragile, and has a high risk of breaking. Keep in mind when cutting text, to keep all lines straight, or it wont be believable that it is professionally done. I think the biggest trick is keep people from knowing it was done with styrofoam. There are ways of covering the foam to seal it for painting. There are machines that will cut 3d scupltures out of huge blocks. Can be cool.
