It's hard to judge this incident without more context. but I too would say there may well be two very different narratives here: A teacher encouraging bullying and ridiculing your child in front of others, or a teacher trying his/her best to teache you son a few funny life skills to shrug off taunting, of which there inevitably will be in 7th grade. In fact, in my DS's upper ES class, there now is a contest to find the worst slanders about "your momma", so much so, that my DH went online to find some really good ones to counter with...
Here they are if your son wants to read up some:
http://www.thejokeyard.com/your_momma_jokes/index.html
I shrugged it off and my son shrugged it off, turning it into a something of a sports, but looking at your post I wonder if there are others on the receiving end who don't feel that way.
I do think you should talk to the teacher but with an open mind. I don't think the focus needs to be on him/her being accused but rather on solving the problem this poses to your son. If all you do is now go bully the teacher, then your son will just have learned one even more humiliating lesson, namely that he can't fend for himself even at that most basic level. There may be multiple sides to work on. The teacher needs to understand that what may have been meant as a joke (if it was) really didn't come across that way. Your son needs to stop taking things personally and he needs to stop worrying about his mom. He needs to develop skills to prevent, sidestep, fend off, and adequately report bullying. And his peers need a few lessons in empathy.