how can I reset to factory setting of my Macbook which is stuck on mute

Why not just reinstall Big Sur? Your initial installation may have been incomplete or corrupted somehow.

Honestly you may be better off reinstalling your Mac OS as ku4hx mentions. As a disclaimer, reinstalling the Operating system will not erase your personal data. Before you do this, make sure you back up your data as described here

These steps from apple detail how to do this (taken from https://support.apple.com/guide/mac-help/reinstall-macos-mchlp1599/mac):

1. Start up your computer in macOS Recovery:

• • On a Mac with Apple silicon: Choose Apple menu  > Shut Down, press and hold the power button until you see “Loading startup options,” select Options, click Continue, then follow the onscreen instructions.
• On an Intel-based Mac: Choose Apple menu  > Restart, then immediately press and hold one of these key combinations, depending on what you want to do:
  • • Install the latest version of macOS compatible with your computer: Press and hold Option-Command-R.
    • Reinstall your computer’s original version of macOS (including available updates): Press and hold Shift-Option-Command-R.
• Reinstall the version of macOS stored on your computer’s built-in recovery volume: Press and hold Command-R.

1. In the Recovery app window, select Reinstall macOS Big Sur, then click Continue.
2. Follow the onscreen instructions. In the pane where you select a volume, select your current macOS volume (in most cases, it’s the only one available).

jeffymd Said:

"how can I reset to factory setting of my Macbook which is stuck on mute: After upgraded to Big Sur recently, my Macbook turned muted frequently[...]"

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Try Reseting the Core Audio:

Type the following command in Terminal:

sudo killall coreaudiod