diff --git a/erpnext/projects/doctype/activity_cost/test_activity_cost.py b/erpnext/projects/doctype/activity_cost/test_activity_cost.py
index 71b8c5e6896..86083cf9813 100644
--- a/erpnext/projects/doctype/activity_cost/test_activity_cost.py
+++ b/erpnext/projects/doctype/activity_cost/test_activity_cost.py
@@ -27,3 +27,43 @@ class TestActivityCost(ERPNextTestSuite):
 		activity_cost1.insert()
 		activity_cost2 = frappe.copy_doc(activity_cost1)
 		self.assertRaises(DuplicationError, activity_cost2.insert)
+
+	def test_default_activity_cost_title_and_duplication(self):
+		activity_type = self._activity_type("_Test Default Cost Type")
+
+		default_cost = frappe.get_doc(
+			{
+				"doctype": "Activity Cost",
+				"activity_type": activity_type,
+				"billing_rate": 80,
+				"costing_rate": 40,
+			}
+		).insert()
+		# without an employee, the title is just the activity type
+		self.assertEqual(default_cost.title, activity_type)
+
+		duplicate = frappe.copy_doc(default_cost)
+		self.assertRaises(DuplicationError, duplicate.insert)
+
+	def test_employee_name_and_title_are_set(self):
+		activity_type = self._activity_type("_Test Employee Cost Type")
+		employee = frappe.db.get_all("Employee", filters={"first_name": "_Test Employee"})[0].name
+		employee_name = frappe.db.get_value("Employee", employee, "employee_name")
+
+		# employee_name is left blank so set_title has to fetch it
+		cost = frappe.get_doc(
+			{
+				"doctype": "Activity Cost",
+				"employee": employee,
+				"activity_type": activity_type,
+				"billing_rate": 60,
+				"costing_rate": 30,
+			}
+		).insert()
+		self.assertEqual(cost.employee_name, employee_name)
+		self.assertEqual(cost.title, f"{employee_name} for {activity_type}")
+
+	def _activity_type(self, name):
+		if not frappe.db.exists("Activity Type", name):
+			frappe.get_doc({"doctype": "Activity Type", "activity_type": name}).insert()
+		return name