The given differential equation is:
\[
M(x, y) \, dx + N(x, y) \, dy = 0,
\]
where
\[
M(x, y) = y(8x - 9y), \quad N(x, y) = 2x(x - 3y).
\]
For exactness, we need to check if the condition \( \frac{\partial M}{\partial y} = \frac{\partial N}{\partial x} \) holds:
\[
\frac{\partial M}{\partial y} = 8x - 18y, \quad \frac{\partial N}{\partial x} = 2(x - 3y) + 2x = 4x - 6y.
\]
Since \( \frac{\partial M}{\partial y} \neq \frac{\partial N}{\partial x} \), the differential equation is not exact.
Next, we check if \( x^2 \) is an integrating factor. Multiply both \( M(x, y) \) and \( N(x, y) \) by \( x^2 \):
\[
M'(x, y) = x^2 y(8x - 9y) = 8x^3 y - 9x^2 y, \quad N'(x, y) = x^2 \cdot 2x(x - 3y) = 2x^3(x - 3y).
\]
Now check exactness for the modified equation:
\[
\frac{\partial M'}{\partial y} = 8x^3 - 9x^2, \quad \frac{\partial N'}{\partial x} = 3x^2(x - 3y) + 2x^3 = 8x^3 - 9x^2.
\]
Since \( \frac{\partial M'}{\partial y} = \frac{\partial N'}{\partial x} \), the equation becomes exact with the integrating factor \( x^2 \).
Thus, the correct answer is (A): The differential equation is not exact and has \( x^2 \) as an integrating factor.