Don't I recall you saying in another thread that you forgot to run that script with the EXEC statements un-commented?

EDIT:  come to look closer, your just posted script...

If you need to combine the results into a single set of results, you can use UNION ALL, and as such requires the same number of columns and matching data...

Eliminate the VALUES clause, and leave it's query behind.   As you are using SELECT, you don't want to use a VALUES clause, as within that context, SQL Server wll expect...

Let's try the following:
-- Create Combo Pack of Top Selling Hats and T-Shirts

CREATE TABLE #Items (
    IID int IDENTITY (1,1),
    Item_Desc varchar(100),
    ItemType varchar(10),
    QtySold int
);

And a couple of other thoughts...   I'm doubtful that even if you kept phase as a standalone dimension, I don't see much value in it.   About the only way that...