Would this work for you?

...
WHERE smp.item_cost_center LIKE
    CASE WHEN( @cost_center = 'ALL') THEN '%' ELSE @cost_center END
  AND smp.item_status LIKE
    CASE WHEN( @item_status = 'ALL') THEN '%' ELSE @item_status END

>Okay what if I had two variables?
>Here is my actual code.
>
>I am using this in the query analyzer to test
>before making it into a procedure.
>They chose between cost centers SMS, SMP, or ALL
>And if the item is active or inactive.
>
>I read the books online but it doesn't
>show case statements for multiple variables
>