PICs are as cheap as any in their class.
You can buy an entry level 10F series PIC for a bit over 30 cents in modest volume from US distributors.
BUT I understand thay have an arrangement in Asia where they sell the parts untested and the end user is reponsible for testing and the price would be MUCH less.
There are Asian manufacturers who have cloned the older style PICs and offer them at a lesser price than equivalent PICs on the open market at least. I suspect that Microchip match them in volume prices privately. [eg I have just received a quote for LSD NimH batteries from one of the big 3 Chinese battery makers at MOQ quantities that tend to make one's eyes water. Quote includes a written request not to tell their competitors their pricing. I doubt its too secret in reality BUT no doubt the same thing happens in the processor area].
So, make 100,000 toys or 1,000,000 and they will probably sell you basic processors for 10 to 15 cents.
There are Asian sourced 4 bit processors specifically aimed at the very large volume markets but the instruction sets and architectures are very weird* and they need their own tool chains and community support like you'd get for mainstream processors is completely lacking. [For instance an olde Fairchild F8 would be at home amongst them. An RCA CDP1801 woould look positively mainstream].
Here is what APPEARS to be the utter bargain of the mainstream microcontroller world. I have not yet found anything that tells me how many clocks per cycle - and some of the old ST processors such as the ST6 were seriesl bus based internally with maybe 10 clocks per instruction! - but even if this was the case these would setill seem a bargain. At first I thought they may be endline, but the ST site says they are "current" and a number of sellers have them at similar prices. They are the best features per $ microcontroller that I have ever seen.
5 x 10 bit ADC,
3 x capture compare plus
3 timers plus watchdog
IIC , UART, SPI, + ... .
I've yet to find the catch. It may be speed. TBD - but low speed would be OK in many cases at the price.