I usually point a finger, make direct eye contact and in a stern voice yell “Inappropriate!” Then I add to it that comments like that are not okay in my classroom. If it becomes an issue, it’s considered bullying and needs to be reported to the office and dealt with immediately.
I stop class. I look intently at the kid. I say something like “This was not okay to say.” I don’t ask a question. I don’t wait for a response. It isn’t a tug of war. I simply want to publicly make it clear that things of this nature aren’t okay in my classroom.
If I think it needs more, or I don’t think the kid understands, or it looks like the kid is about to argue with me, I add “let’s talk after class.” Then after class, I am really calm and normal – not angry. I ask the kid “Why do you think I asked you to stay?” and I let the kid explain. I try to guide the kid through guided questioning to see why what s/he said was wrong (e.g. “Why might someone take offense at it?”… “Could you think of someone who might not find it funny?”… things like that). If at the end of it, they don’t get it, I explain it to them. I thank them for staying and talking with me.
Of course this is for less serious things. If it is truly beyond the pale (anything that would foster a non-safe place… racist/bullying/harassing statements), I’d have the dean get involved.
Building our Classroom 
I usually point a finger, make direct eye contact and in a stern voice yell “Inappropriate!” Then I add to it that comments like that are not okay in my classroom. If it becomes an issue, it’s considered bullying and needs to be reported to the office and dealt with immediately.
I stop class. I look intently at the kid. I say something like “This was not okay to say.” I don’t ask a question. I don’t wait for a response. It isn’t a tug of war. I simply want to publicly make it clear that things of this nature aren’t okay in my classroom.
If I think it needs more, or I don’t think the kid understands, or it looks like the kid is about to argue with me, I add “let’s talk after class.” Then after class, I am really calm and normal – not angry. I ask the kid “Why do you think I asked you to stay?” and I let the kid explain. I try to guide the kid through guided questioning to see why what s/he said was wrong (e.g. “Why might someone take offense at it?”… “Could you think of someone who might not find it funny?”… things like that). If at the end of it, they don’t get it, I explain it to them. I thank them for staying and talking with me.
Of course this is for less serious things. If it is truly beyond the pale (anything that would foster a non-safe place… racist/bullying/harassing statements), I’d have the dean get involved.
Sam nailed it. Do what he says.