$1200 isn't bad for a full computer that does everything you want including gaming.
I'm looking at a system upgrade, and just mobo, cpu, memory, and video card is $750. If I had to buy everything else including monitor, keyboard/mouse, case, PSU, dvd writer, operating system, etc., it would cost well over $1200.
For that specific computer, some parts were most likely priced higher than you would have paid if you'd upgraded them yourself (video cards often cost twice as much if you have the computer manufacturer install it instead of doing it yourself) but the basic system seems reasonably modern and it's obviously fairly fast, so the little bit extra it cost is pretty much sunk into the warranty and service. If I buy my own parts and make a computer and then it dies, I have to troubleshoot it and try to get either the retailer or the part manufacturer to cough up a replacement. If a store bought computer dies, you just bring it back in and they ought to fix it.
Heck, my Dad's last Dell paid for itself in the first 3 months. It had a soundcard and power supply go bad and Dell sent someone out to replace both of them. At 11 months, the cdrom drive failed and Dell cross-shipped a new one and we installed it ourselves, returning the broken one using an included shipping label. The total cost for us to fix the 3 problems was 30 min on the phone and an hour or so of installation time. If we'd had to make those fixes on a DIY computer, at the very least we'd have had to pay for shipping and the computer would probably have sat there unusable while the parts were being shipped.
