Do-It-Yourself Magic by Ruth Chew, 1987.

Rachel and her younger brother, Scott, stop by the discount store on the way home to admire the model kits.  Most of the model kits are too expensive for them to buy, but one kit has been put on discount, The Build-Anything Kit.  The kids think it’s a good deal because they can use it to build more than one kind of model. 

When they get it home and begin to play with it, they are confused at first.  Scott tries to build a model stock car racer, but all the wheels and other pieces are all different sizes.  Then, Rachel finds a double-headed hammer labeled, “sizer.”  The kids discover that when they hit the model pieces with the hammer, they can make them bigger or smaller.  Besides working on pieces, the sizer can also make people bigger or smaller.  Rachel makes Scott smaller so that he can drive his stock car model around the room.  Then, when he drives outside, she makes both him and the car bigger, so the car is the size of a normal car.  A neighbor spots them in this strange car and calls the police, so the children are forced to shrink the car again quickly. 

When they get home, they discover that they left the door open and that a man is trying to steal their tv set.  Without thinking, Rachel hits him with the sizer and shrinks him.  Now, they have to decide what to do with him before the situation gets worse!

At first, the kids keep the thief in a glass, but then they let him out and allow him to drive around in the stock car model.  While they are trying to decide what to do with him, they take a look in the model box again and notice some pieces that weren’t there before.  They look and feel like stone blocks, so they begin building a castle with them.  To their surprise, the man they shrunk runs into the castle.  They are worried about him, so they hit the castle with the sizer to make it bigger.  Suddenly, the castle is as large as life, and they go inside to discover that they are back in medieval times. What will happen to the thief in the past, and will the kids get back home?

The book is currently available online through Internet Archive.