This article is from the Model Rockets FAQ, by Wolfram von Kiparski with numerous contributions by others.
Repairing foam is fairly easy. One simply hacks out the damaged piece,
glues in a block of foam and carves and sands to shape. Carving is best
done with a brand new utility knife (the kind that has break-off points)
and sanding can be done with a sanding block. Sheeting is replaced in
the same manner - cut out the damaged piece and glue on a replacement.
A little glass cloth or carbon fiber matte over the break helps too.