Toys have small parts. It is just the way it has to be. This is one of the reasons I make two of everything. It doubles the length of the part. It is also good to know if a small part comes out the same rip of a larger part. Leave the part long and do all the drilling and routing to the small part. Then cut it to length.
Sadly there really is no way to use 100% of the board. I have found that I accumulate a lot of pieces between 4" and 12" and they really are not good for much. I can use some of it but I still accumulated faster than I could get rid of it. There is an interest for wood blocks, so about once a quarter I will go through my pile and chop out knots and defects and belt sand off the rough edges. This will create different sizes and shapes. They are put in a bucket and given away. This has reduced my firewood pile down to basically kindling and smoking chips. I do caution you not to use any reclaimed or finished wood. Blocks will be put in mouths.
I have found that the axle pegs often come out of the holes. This is largely due to the hole is tight so there is no glue bond between the peg and the hole. The pegs can be grooved, like grooved dowels, by using pliers. Only squeeze tight enough to put the grooves in, not crush the peg. Do not do this where the wheel is going to sit.
Business cards are the perfect thickness when making loose joints such as wheels. They allow for just enough space to move but not wobble everywhere.
Profiling Small Parts on a Router
When a profile needs to be added to a small part like a fender or roof, it is easier to make the part out of a larger part and then cut to size later.
Disassembling parts with axle pegsWhen doing the dry fit on the car carrier there were a couple of pegs that were inserted a little too far and I thought I would have to cut or drill out. However I needed to sand some parts flush parts first. When the random orbit sander came close to the peg, it wiggled it right out. This only worked on the pegs that I pressed in. If the needed a little more persuasion this trick did not work.