"Mute [x]" means that 'mute is false', so I click to make it say "Mute []" but instead you take the "x" away, ... so is mute no longer false?? If sound isn't working then this can be difficult to determine. You can fix it with a tooltip and/or familiarity with the system.

Buttons have more affordance too.

I would not use that word because it is a negative, so it makes the user think. "Mic on" and "Mic off" are better.

Use an adjective?

  [ ] Muted
  [x] Muted