Yes, variations are do produced in the progeny but...
Evidently, the hermaphrodite organism has two options for sexual reproduction.
1) It undergoes self-fertilization for high frequency mating (production of progeny).
In this case, the organism produces both sperm and ovum. As the individual gametes are from the same organism, the resulting offspring does not show variation (same genes).
2) It undergoes cross-fertilization for low frequency mating. In this case, one organism produces sperm and another organism, ovum. The fusion of both produces an offspring which is a recombinant of both the organisms (different genes) and hence shows variation.