It is correct to choose "A. mix it up".
1. This is because what is mixed is the sugar which you have just put into the water. That is to say, you should mix the sugar up in the water （在水中把糖混合进去）.
2. Please look at the following example:
His explanation just mixed me up more. 他的解释令我更加糊涂了.
3. In the above sentence, "me" is also a singular（单数）, whereas it can be mixed up. So, the uncountable noun "sugar", which is singular, in your sentence can be mixed all the same.
Translation: 你应该在水中放进去一茶匙糖,然后把糖搅和起来（溶入水里）.