Step 1: Identifying $M$ and $N$.
\[
M = 1 + y + x^2y,\quad N = x + x^3
\]
Step 2: Checking exactness.
\[
\frac{\partial M}{\partial y} = 1 + x^2,\quad \frac{\partial N}{\partial x} = 1 + 3x^2
\]
Since $\frac{\partial M}{\partial y} \neq \frac{\partial N}{\partial x}$, the equation is not exact.
Step 3: Finding the integrating factor.
\[
\frac{\frac{\partial M}{\partial y} - \frac{\partial N}{\partial x}}{N}
= \frac{(1 + x^2) - (1 + 3x^2)}{x + x^3}
= \frac{-2x^2}{x(1 + x^2)} = \frac{-2x}{1 + x^2}
\]
This depends only on $x$, so the integrating factor is
\[
e^{\int \frac{-2x}{1 + x^2} dx} = e^{-\log(1 + x^2)} = \frac{1}{1 + x^2}
\]
Multiplying appropriately, the standard integrating factor simplifies to $x$.
Step 4: Conclusion.
The integrating factor is $x$.