When a supervisor advises you to get accustomed to offensive racial language, he should get accustomed to legal language, because that is what he is likely to hear if he continues down this ill-advised path. His comments are absolutely inappropriate and unacceptable in any work environment, and they pose substantial liability for him and the company.
If your company has a human resources department, you should discuss this situation with the human resources manager as soon as possible. If your company is lacking in this area as well, then you should report the incident to your supervisor's manager. Sometimes it can be difficult for one employee to take this kind of step, so you may want to have one or two of your co-workers, especially if they witnessed the incident.
Unless your company is operating in the Stone Age, some action will be taken here. Hopefully you see management in action rather than management inaction.
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