AFCI breaker trips when GFCI receptable's test button is pressed
I will post an answer as I believe others will run into similar problem.

The issue is that the wiring has neutral wires from multiple circuits connected together. While this works with older breakers. It will not work with newer AFCI breaker. The solution is to clean up the wiring such that the hot and neutral pairs are isolated to individual breakers and not mixed with other breakers.