Ibadan Manufacturing Co. operates a standard marginal costing system. Standard variable cost per unit is ₦1,200 (materials ₦700, labour ₦300, variable overhead ₦200). Budgeted production and sales were 5,000 units; actual production and sales were 4,600 units. Actual total variable costs were ₦5,640,000. What is the total variable cost variance?

Standard variable cost for actual production = 4,600 × ₦1,200 = ₦5,520,000. Total Variable Cost Variance = Standard Cost for Actual Output – Actual Cost = ₦5,520,000 – ₦5,640,000 = ₦120,000 Adverse. The variance is adverse because actual variable costs exceeded the standard cost allowed for actual output. Under marginal costing, fixed overheads are excluded from product costs, so only variable cost variances are computed in this system.