Line an 8-inch x 8-inch square pan with parchment paper - a 9x9 pan would be fine too. Then coat the paper with non-stick cooking spray. Set aside. Grab one bowl for each food coloring color you've chosen and set them aside.
In a large microwave-safe bowl, combine the white chocolate and sweetened condensed milk. Microwave for 1 minute, remove, and stir. Continue heating in 30-second intervals, stirring after each heating, for another 1-2 minutes. The mixture is ready when the mixture is evenly combined and has a thick texture. Do not overcook the fudge!
Remove the bowl from the microwave and divide the fudge base evenly between the bowls based on the number of colors you're using. (Just eyeball it.) For 4 colors, you'll put about 1/4 of the fudge base into each bowl, and so on.
Add 3-4 drops of on food color into each bowl. Use a spoon to mix until evenly combined. Add more food coloring as needed to reach your desired color. Divide the powdered sugar evenly between the colored fudge base bowls and stir to combine.
Randomly drop each color of fudge into the prepared pan - add dollops here and there and keep layering them. Once layered, use the back of a spoon to smooth the top of the fudge into an even layer.
Cover with plastic wrap and chill the fudge in the fridge for 4 hours to overnight.
Remove from fridge and use the parchment paper to lift the fudge from the pan. Slice the fudge into small squares - I usually cut 16 squares in a 4x4 grid.
Decorating
Color the frosting as desired. Divide it into bowls based on the number of colors you choose to use and stir in the food coloring.
Place each color of frosting into its own piping bag fitted with a tip. Pipe a small rosette or drape lines of frosting on top of each fudge square. Place googly eyes on each piece randomly.
Notes
You can choose whichever colors you like for the fudge. Go with classic Halloween colors like green, black, purple, and orange. Make a rainbow fudge with green and blue monsters on top. Or even use red, pink, and white for Valentine's Day cuddle monster fudge.
You can use homemade or store-bought frosting to top the fudge squares. I really like the fudge paired with this cream cheese frosting, but if you want to keep things easy a tub of vanilla frosting from the baking aisle works too.
If you don't have piping bags and tips, don't worry. You can use a ziploc bag with one corner cut off. The monsters can look anyway you want, so just have fun with it!