Look at the following picture....
What I'd like to know is how you plan to get all that extra wire back into the box again!
It depends on what's behind it. If it's just open air, just mud won't work. It'll eventually fall into the wall.
What I'd do is cut the whole larger (6" wide?) and then slide in a piece of wood, fastened to the back of the wall with a couple screws from the front. Then cut a new piece of drywall just a hair smaller than the hole and screw it to the piece of wood. Finally mud and tape the joints as you would with any other joint.
Some kind of backing is needed just to keep the mud from falling into the wall cavity. However, for the picture you posted, probably the easiest and neatest solution is simply to make a clean cut somewhat larger than the mangled section, and use a small piece of drywall. If I was doing it I would cut out a rectangle from just above and to the left of the box, extending down to the floor and right to the corner.
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