DMeister, you are not this daft.
He's a kid. Kid's are prone to saying stupid shit and finding offensive things funny. It would explain why my 10 year old cousins has an obsession with watching R Rated films and saying the F word while his mom isn't around.
People grow up, mature, and get life experiences. If you are going to belittle the guy for being an early or pre teenager and try to hold him up to some moral coda, than you should really reassess what you expect out of people. It's unreasonable to try and make this into a race issue. He's a kid being a kid, yeah its stupid and racist, but kids have done and said much worse things to me.
As long as there is a taboo associated with the n-word, the immature and politically incorrect nature of youth will abuse it.