question

The following statements have been made about a transfer pricing system where division A transfers output to division B.
Internal transfers should be preferred when there is an external market for the transferred item, because there will be more control over quality and delivery
The transfer price will determine how profits will be shared between the two divisions.
Which of the above statements is/are true?
I think the first statement is incorrect because external purchases might be cheaper and it might be more important to cut down on costs. So is it correct. If not why